The Role of Utility Interdependence in Public Good Experiments
31 Pages Posted: 3 Sep 2008
Date Written: August, 29 2008
A popular approach to explain over-contribution in public good games is based on the assumption that people care (either positively or negatively) about the utility of other participants. Over-contribution then is an outcome of utility maximization where utility depends on subjects' own payoffs as well as on the payoffs of other players. In this paper, I study to what extent this assumption of utility interdependence is responsible for over-contribution. I design three treatments where subjects' decisions cannot affect opponents' payoffs and thus utility interdependence cannot explain cooperative behavior. The main result is that while average contribution in these treatments is below the benchmark it nonetheless stays well above zero. Even when no one benefits from subjects' generosity the average contributions are as high as one third of the endowment and are only 25% below those in the benchmark level. This suggests that utility interdependence is not the main factor responsible for over-contribution.
Keywords: public good experiments, fairness, reciprocation, altruism
JEL Classification: C9
Suggested Citation: Suggested Citation