Are Cooperators Efficiency- or Fair-Minded? Evidence from a Public Goods Experiment

Abstract

We use a two-person public goods experiment to distinguish between efficiency and fairness as possible motivations for cooperative behavior. Asymmetric marginal per capita returns allow only the high-productivity player to increase group payouts when contributing positive amounts. Asymmetric contributions, however, yield unequal individual payouts. To assess a priori cooperative preferences, we measure individual 'value-orientations' by means of the decomposed game technique. Overall, our results indicate that fairness (or inequality aversion) is more influential than efficiency in driving behavior.

Keywords: Public goods experiments, Conditional cooperation, Fairness, Efficiency, Value orientations

JEL Classification: A13, C92, D63, H41