Voting on Thresholds for Public Goods: Experimental Evidence

26 Pages Posted: 29 Dec 2009

See all articles by Julian Rauchdobler

Julian Rauchdobler

affiliation not provided to SSRN

Rupert Sausgruber

Vienna University of Economics and Business - Department of Economics

Jean-Robert Tyran

University of Vienna; University of Copenhagen - Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 20, 2009

Abstract

Introducing a threshold in the sense of a minimal project size transforms a public goods game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary provision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter-productive. This holds under a range of threshold levels and refund rates. We test if thresholds perform better if they are endogenously chosen, i.e. if a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects but they are not strong enough to significantly improve the efficiency of thresholds.

Keywords: provision of public goods, threshold, voting, experiments

JEL Classification: H41, D72, C92

Suggested Citation

Rauchdobler, Julian and Sausgruber, Rupert and Tyran, Jean-Robert, Voting on Thresholds for Public Goods: Experimental Evidence (December 20, 2009). Univ. of Copenhagen Dept. of Economics Discussion Paper No. 09-27. Available at SSRN: https://ssrn.com/abstract=1529270 or http://dx.doi.org/10.2139/ssrn.1529270

Julian Rauchdobler

affiliation not provided to SSRN ( email )

Rupert Sausgruber

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
Vienna, 1020
Austria
+43 1 31336 4572 (Phone)

Jean-Robert Tyran (Contact Author)

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://homepage.univie.ac.at/jean-robert.tyran/

University of Copenhagen - Department of Economics ( email )

Ă˜ster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 353 23 027 (Phone)

HOME PAGE: http://www.econ.ku.dk/tyran/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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