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Altruism and Noisy Behavior in One-Shot Public Goods Experiments

  • Jacob K. Goeree

    ()

  • Charles A. Holt

    ()

  • Susan K. Laury

An increase in the common marginal value of a public good has two effects: it increases the benefit of a contribution to others, and it reduces the net cost of making a contribution. These two effects can be decomposed by letting a contribution have an "internal" return for oneself that differs from the "external" return to someone else. We use this framework in a series of one-shot public goods games in which subjects make choices in ten treatments with no feedback. Contributions are generally increasing in the external return and group size, which suggests that altruism in this context is not simply of the "warm glow" variety, i.e. giving only for the sake of giving. Contributions are also increasing in the internal return, indicating that decisions are sensitive to the costs of helping others. We specify a logit equilibrium model in which individuals are motivated by own and others' earnings, and in which choice is stochastic. Maximum likelihood estimates of altruism and logit error parameters are significant and of reasonable magnitudes, and the resulting two-parameter model tracks the pattern of contributions across the ten treatments remarkably well.

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File URL: http://www.virginia.edu/economics/RePEc/vir/virpap/papers/virpap331.pdf
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Paper provided by University of Virginia, Department of Economics in its series Virginia Economics Online Papers with number 331.

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Length: 25 pages
Date of creation: Sep 1999
Date of revision:
Handle: RePEc:vir:virpap:331
Contact details of provider: Web page: http://www.virginia.edu/economics/home.html

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  1. James Andreoni, 2001. "Giving According to GARP," Theory workshop papers 339, UCLA Department of Economics.
  2. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
  3. Andreoni, James, 1995. "Cooperation in Public-Goods Experiments: Kindness or Confusion?," American Economic Review, American Economic Association, vol. 85(4), pages 891-904, September.
  4. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
  5. Offerman, Theo & Schram, Arthur & Sonnemans, Joep, 1998. "Quantal response models in step-level public good games," European Journal of Political Economy, Elsevier, vol. 14(1), pages 89-100, February.
  6. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
  7. David Goetze & Peter Galderisi, 1989. "Explaining collective action with rational models," Public Choice, Springer, vol. 62(1), pages 25-39, July.
  8. Smith, Vernon L, 1985. "Experimental Economics: Reply," American Economic Review, American Economic Association, vol. 75(1), pages 264-72, March.
  9. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 1998. "A theoretical analysis of altruism and decision error in public goods games," Journal of Public Economics, Elsevier, vol. 70(2), pages 297-323, November.
  10. Palfrey, Thomas R & Prisbrey, Jeffrey E, 1997. "Anomalous Behavior in Public Goods Experiments: How Much and Why?," American Economic Review, American Economic Association, vol. 87(5), pages 829-46, December.
  11. Holt, Charles A. & Laury, Susan K., 2008. "Theoretical Explanations of Treatment Effects in Voluntary Contributions Experiments," Handbook of Experimental Economics Results, Elsevier.
  12. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
  13. Gary E Bolton & Axel Ockenfels, 1997. "A Theory of Equity, Reciprocity, and Competition," Levine's Working Paper Archive 1889, David K. Levine.
  14. Laury, Susan K. & Holt, Charles A., 2008. "Voluntary Provision of Public Goods: Experimental Results with Interior Nash Equilibria," Handbook of Experimental Economics Results, Elsevier.
  15. Isaac, R Mark & Walker, James M, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 179-99, February.
  16. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
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