Voluntary Contribution Mechanism Played over an Infinite Horizon

21 Pages Posted: 14 Mar 2013

See all articles by Lijia Tan

Lijia Tan

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Lijia Wei

Wuhan University - School of Economics and Management; Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2013

Abstract

In recent literature, empirical evidence shows that cooperation improves when games are infinitely repeated. We experimentally investigate the evolution of voluntary contributions to a public good played over an infinite horizon. The experiment also includes sessions of voluntary contribution mechanism (VCM) games played over a finite horizon as a control. We find that in infinitely repeated VCM games (1) when subjects are inexperienced, there is no difference of contributions compared with finitely repeated games; (2) contributions remain at the same level after an unexpected restart; (3) most groups do not have a monotonic trend of contribution with repetition. The data provides strong support for heterogeneous subjects, which may explain the non-monotonic trend of average contributions in infinitely repeated VCM games. This non-monotonic trend is caused by one category of subjects who expect others to contribute in period t as they did in period t-1.

Keywords: voluntary contribution mechanism, Infinite horizon, restart effect, non-monotonic trend, heterogeneous subjects

JEL Classification: C91, C71, H41

Suggested Citation

Tan, Lijia and Wei, Lijia, Voluntary Contribution Mechanism Played over an Infinite Horizon (March 1, 2013). Available at SSRN: https://ssrn.com/abstract=2232925 or http://dx.doi.org/10.2139/ssrn.2232925

Lijia Tan (Contact Author)

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 361005
China

Lijia Wei

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 361005
China

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