Absolute versus Relative: Asymmetric Framing in a Heterogeneous-Endowment Public Goods Game

48 Pages Posted: 16 Aug 2021 Last revised: 3 Aug 2022

See all articles by Xianghong Wang

Xianghong Wang

Renmin University of China - School of Economics

Jie Zheng

Shandong University - Center for Economic Research

Lan Zhou

Renmin University of China, School of Economics

Date Written: August 3, 2022

Abstract

Individual contributions to public goods can be framed in absolute or relative metrics. We examine how the framing salience affects the contribution behavior when group members are heterogeneously endowed, based on a reference-dependent theory with salience weights allocated to the absolute or relative reference points. We test our theory through an experimental design where the framing is either uniform (absolute or relative for all players) or asymmetric for players with different endowments. We find that absolute framing incentivizes higher public goods contributions than the relative framing does, while the asymmetric framing with relative for high-type and absolute for low-type members leads to similarly high contribution levels compared to the absolute framing but different profit distributions among members. Comparing the experimental outcomes and theoretical predictions, we discuss the competing effects of framing salience and the self-serving bias on contribution behavior. Our study contributes to a better understanding of burden-sharing rules in the context of absolute and relative framing, and provides implications for related public policies for public goods.

Keywords: Public goods; Absolute-relative framing; Heterogeneous endowments; Reference point

JEL Classification: D64; D82; D91; H41

Suggested Citation

Wang, Xianghong Shirley and Zheng, Jie and Zhou, Lan, Absolute versus Relative: Asymmetric Framing in a Heterogeneous-Endowment Public Goods Game (August 3, 2022). Available at SSRN: https://ssrn.com/abstract=3904519 or http://dx.doi.org/10.2139/ssrn.3904519

Xianghong Shirley Wang

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100080
China

Jie Zheng

Shandong University - Center for Economic Research ( email )

Jinan, Shandong 250100
China

HOME PAGE: http://https://meetecon.com/jie/

Lan Zhou (Contact Author)

Renmin University of China, School of Economics ( email )

China

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