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Heterogeneous Reactions to Heterogeneity in Returns from Public Goods

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  • Urs Fischbacher
  • Sabrina Teyssier
  • Simeon Schudy

Abstract

In many cases individuals benefit differently from the provision of a public good. We study in a laboratory experiment how heterogeneity in returns and uncertainty affects unconditional and conditional contribution behavior in a linear public goods game. The elicitation of conditional contributions in combination with a within subject design allows us to investigate belief-independent and type-specific reactions to heterogeneity. We find that, on average, heterogeneity in returns decreases unconditional contributions but does not affects conditional contributions only weakly. Uncertainty in addition to heterogeneity reduces conditional contributions slightly. Individual reactions to heterogeneity differ systematically. Selfish subjects and one third of conditional cooperators do not react to heterogeneity whereas the reactions of the remaining conditional cooperators vary. A substantial part of heterogeneity in reactions can be explained by inequity aversion which accounts for different reference groups subjects compare to.

Suggested Citation

  • Urs Fischbacher & Sabrina Teyssier & Simeon Schudy, 2012. "Heterogeneous Reactions to Heterogeneity in Returns from Public Goods," TWI Research Paper Series 73, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  • Handle: RePEc:twi:respas:0073
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    References listed on IDEAS

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    Cited by:

    1. Esther Blanco & Maria Claudia Lopez & James M. Walker, 2016. "The Opportunity Costs of Conservation with Deterministic and Probabilistic Degradation Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(2), pages 255-273, June.
    2. Sorensen, Andrea Lockhart, 2015. "Asymmetry, uncertainty, and limits in a binary choice experiment with positive spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 43-55.
    3. Luigi Butera & John List, 2017. "An Economic Approach to Alleviate the Crisis of Confidence in Science: With an Application to the Public Goods Game," Artefactual Field Experiments 00608, The Field Experiments Website.
    4. Cox, Caleb A., 2015. "Cursed beliefs with common-value public goods," Journal of Public Economics, Elsevier, vol. 121(C), pages 52-65.
    5. Abigail Barr & Trudy Owens & Ashira Perera, 2017. "Collective action when public good returns are heterogeneous," Discussion Papers 2017-05, University of Nottingham, CREDIT.
    6. Esther Blanco & Maria Claudia Lopez & James M. Walker, 2013. "Tensions Between the Resource Damage and the Private Benefits of Appropriation in the Commons," Working Papers 2013-02, Faculty of Economics and Statistics, University of Innsbruck.
    7. Vincent Théroude & Adam Zylbersztejn, 2017. "Cooperation in a risky world," Working Papers halshs-01443917, HAL.
    8. Philipp E. Otto & Friedel Bolle, 2016. "Organizational power: Should remuneration heterogeneity mirror hierarchy?," Review of Economic Design, Springer;Society for Economic Design, vol. 20(3), pages 187-205, September.
    9. Lata Gangadharan & Nikos Nikiforakis & Marie Claire Villeval, 2015. "Equality concerns and the limits of self-governance in heterogeneous populations," Working Papers 1525, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    10. Brock V Stoddard, 2015. "Probabilistic Production of a Public Good," Economics Bulletin, AccessEcon, vol. 35(1), pages 37-52.
    11. repec:ebl:ecbull:eb-14-01043 is not listed on IDEAS
    12. Christoph Engel & Svenja Hippel, 2017. "Experimental Social Planners: Good Natured, but Overly Optimistic," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2017_23, Max Planck Institute for Research on Collective Goods.
    13. Béatrice Boulu-Reshef & Samuel H. Brott & Adam Zylbersztejn, 2017. "Does Uncertainty Deter Provision of Public Goods?," Revue économique, Presses de Sciences-Po, vol. 68(5), pages 785-791.
    14. Edward J. Cartwright & Denise Lovett, 2014. "Conditional Cooperation and the Marginal per Capita Return in Public Good Games," Games, MDPI, Open Access Journal, vol. 5(4), pages 1-23, November.
    15. Edward J Cartwright & Denise Lovett, 2013. "Leadership and conditional cooperation in public good games: What difference does the game make?," Studies in Economics 1324, School of Economics, University of Kent.
    16. Nax, Heinrich H. & Balietti, Stefano & Murphy, Ryan O. & Helbing, Dirk, 2015. "Meritocratic matching can dissolve the efficiency-equality tradeoff: the case of voluntary contributions," LSE Research Online Documents on Economics 65443, London School of Economics and Political Science, LSE Library.
    17. Andrea Robbett, 2016. "Community dynamics in the lab," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(3), pages 543-568, March.
    18. Grund, Christian & Harbring, Christine & Thommes, Kirsten, 2015. "Cooperation in Diverse Teams: The Role of Temporary Group Membership," IZA Discussion Papers 8761, Institute for the Study of Labor (IZA).
    19. Stoddard, Brock & Walker, James M. & Williams, Arlington, 2014. "Allocating a voluntarily provided common-property resource: An experimental examination," Journal of Economic Behavior & Organization, Elsevier, vol. 101(C), pages 141-155.
    20. repec:eee:eecrev:v:100:y:2017:i:c:p:143-156 is not listed on IDEAS
    21. Elena Molis & Levent Neyse & Raul Peña-Fernandez, 2016. "Heterogeneous Returns and Group Formations in the Public Goods Game," ThE Papers 16/02, Department of Economic Theory and Economic History of the University of Granada..
    22. Esther Blanco & Maria Claudia Lopez & James M. Walker, 2012. "The opportunity costs of conservation with deterministic and probabilistic degradation externalities," Working Papers 2012-25, Faculty of Economics and Statistics, University of Innsbruck.
    23. repec:eee:soceco:v:69:y:2017:i:c:p:78-82 is not listed on IDEAS
    24. Gangadharan, Lata & Nikiforakis, Nikos & Villeval, Marie Claire, 2017. "Normative conflict and the limits of self-governance in heterogeneous populations," European Economic Review, Elsevier, vol. 100(C), pages 143-156.

    More about this item

    Keywords

    public goods; social preferences; conditional cooperation; heterogeneity;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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