Playing with Other People’s Money: Contributions to Public Goods by Trustees

40 Pages Posted: 18 Sep 2012

See all articles by Michael D. Makowsky

Michael D. Makowsky

Clemson University - John E. Walker Department of Economics

Wafa Hakim Orman

University of Alabama in Huntsville - College of Business Administration

Sandra J. Peart

University of Richmond - Jepson School of Leadership Studies

Date Written: September 17, 2012

Abstract

Decisions about the level and allocation of public goods in the real world are frequently made by representatives or trustees, rather than by the contributors themselves. We design and conduct an experiment to test the difference between contributions made by trustees vis-à-vis contributions made with one's own endowment. We explore the patterns of decisions made by subjects in the two games, distinguishing between altruistic and reciprocal actions, and unpacking the potential heterogeneity of other-regarding preferences that motivate the contributions we observe. We find that subjects tend to contribute more when acting as trustees than when they are playing with their own money. Further, and consistent with “warm glow” theories of altruism, trustees more frequently conditionally contribute more than the rest of the group and unconditionally contribute more than they expect from others.

Keywords: Laboratory Experiment, Free Riding, Public Goods Game, Voluntary Contribution Mechanism, Trustees

JEL Classification: C92, D71, H41

Suggested Citation

Makowsky, Michael D. and Orman, Wafa Hakim and Peart, Sandra J., Playing with Other People’s Money: Contributions to Public Goods by Trustees (September 17, 2012). Available at SSRN: https://ssrn.com/abstract=2148113 or http://dx.doi.org/10.2139/ssrn.2148113

Michael D. Makowsky (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

HOME PAGE: http://michaelmakowsky.com

Wafa Hakim Orman

University of Alabama in Huntsville - College of Business Administration ( email )

United States

Sandra J. Peart

University of Richmond - Jepson School of Leadership Studies ( email )

Jepson Hall
Richmond, VA 23173
United States

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