'Expressive' Obligations in Public Good Games: Crowding-In and Crowding-Out Effects

24 Pages Posted: 5 Jun 2010

See all articles by Luca Corazzini

Luca Corazzini

University of Padua - Department of Economics; Bocconi University - Department of Economics

Anna Marenzi

Ca' Foscari University of Venice, Department of Economics

Michele Bernasconi

Università Ca' Foscari, Venezia - Department of Economics and SSE

Date Written: March 5, 2010

Abstract

We study individual behaviour in a repeated linear public good experiment in which, in each period, subjects are required to contribute a minimum level and face a certain probability to be audited. Audited subjects who contribute less than the minimum level are convicted to pay the difference between the obligation required and the voluntary contribution. We study the 'expressive' power of the obligations. While at early stages subjects contribute the minimum level, with repetition contributions decline below the required amount indicating that expressive obligations are not capable to sustain cooperation. We observe that expressive obligations exert a rather robust crowding-out effect on voluntary contributions as compared to a standard public good game. The crowding-out is stronger when payments collected by the monitoring activity are distributed to subjects rather than when they are pure dead-weight-loss.

The work was supported by a grant from MIUR (Ministero dell’Istruzione, dell’Università e della Ricerca).

Keywords: Expressive law, motivation crowding theory, laboratory experiments

JEL Classification: C91, H26, H41, K40

Suggested Citation

Corazzini, Luca and Marenzi, Anna and Bernasconi, Michele, 'Expressive' Obligations in Public Good Games: Crowding-In and Crowding-Out Effects (March 5, 2010). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 04_10. Available at SSRN: https://ssrn.com/abstract=1565320 or http://dx.doi.org/10.2139/ssrn.1565320

Luca Corazzini

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Anna Marenzi

Ca' Foscari University of Venice, Department of Economics ( email )

Cannaregio 873
Venice, 30121
Italy

Michele Bernasconi (Contact Author)

Università Ca' Foscari, Venezia - Department of Economics and SSE ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

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