Voluntary Contribution Mechanism Played over an Infinite Horizon
21 Pages Posted: 14 Mar 2013
Date Written: March 1, 2013
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: Suggested Citation