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Voting and transfer payments in a threshold public goods game

Listed author(s):
  • Feige, Christian
  • Ehrhart, Karl-Martin
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    In a laboratory experiment, we investigate if groups consisting of two heterogeneous player types (with different marginal contribution costs) can increase their total contributions and payoffs in a threshold public goods game if transfer payments are possible among the players. We find that transfer payments are indeed used in many groups to shift contributions from high-cost players to low-cost players, thereby not only increasing social welfare, but also equalizing payoffs. In a repeated setting with individual voluntary contributions and transfers, this redistribution effect takes a few rounds to manifest and high-cost players benefit the most in terms of payoffs. The same beneficial effect of transfer payments can also be achieved in a one-shot setting by having the groups vote unanimously on contributions and transfers of all players.

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    File URL: https://www.econstor.eu/bitstream/10419/122155/1/839327870.pdf
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    Paper provided by Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering in its series Working Paper Series in Economics with number 73.

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    Date of creation: 2015
    Handle: RePEc:zbw:kitwps:73
    Contact details of provider: Web page: http://www.wiwi.kit.edu/

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    10. Federica Alberti & Edward J. Cartwright, 2010. "Does the Endowment of Contributors Make a Difference in Threshold Public Good Games?," Studies in Economics 1009, School of Economics, University of Kent.
    11. Benoit, Jean-Pierre & Krishna, Vijay, 1985. "Finitely Repeated Games," Econometrica, Econometric Society, vol. 53(4), pages 905-922, July.
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    14. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
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