Public Good Provision, Punishment, and the Endowment Origin: Experimental Evidence

Abstract

This paper studies contributions and punishments in a linear public good game, where group members have different sources of endowment. We compare the behavior of homogeneous groups, in which subjects are exogenously assigned the same endowments, with that of heterogeneous groups, in which half the group members have to exert effort to earn their endowments (effort subjects) and the other half are endowed with a windfall of equal value (windfall subjects).

If the opportunity to punish is absent, free-riding becomes the ubiquitous form of behavior over time both in homogeneous and in heterogeneous groups. If the opportunity to punish is present, contributions increase over time, although the two groups do not exhibit any differences in either the amount of contributions or the amount of punishment. Furthermore, effort and windfall subjects make similar contributions in heterogeneous groups.

Within the heterogeneous groups, over the entire time interval and conditional on the decision to punish, effort subjects punish (slightly) less severely than those who received windfall endowments.

Keywords: Endowment Origin, Linear Public Good Game, Punishment

JEL Classification: D63, H41, C91, C92