Improving Voluntary Public Good Provision by a Non-Governmental, Endogenous Matching Mechanism: Experimental Evidence

33 Pages Posted: 14 Oct 2014

See all articles by Christiane Reif

Christiane Reif

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research

Dirk T. G. Rübbelke

Technische Universität Bergakademie Freiberg

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics

Date Written: October 1, 2014

Abstract

Social norms can help to foster cooperation and to overcome the free-rider problem in private provision of public goods. This paper focuses on the enforcement of social norms by a self-introduced punishment and reward scheme. We analyse if subjects achieve to implement a norm-enforcement mechanism at their own expense by applying the theory of non-governmental norm-enforcement by Buchholz et al. (2014) in a laboratory experiment. Based on their theory without central authority and endogenously determined enforcement mechanism, we implement a two-stage public good game: At the first stage subjects determine the strength of penalty/reward on their own and in the second stage they decide on their contributions to the public good. We find that the mechanism by Buchholz et al. (2014) leads to a higher public good contribution than without the use of any mechanism. Only in a few cases groups end up with a zero enforcement mechanism. This result indicates that subjects are apparently willing to contribute funds for implementing an enforcement mechanism. Moreover, higher enforcement parameters lead to higher public good contributions in the second stage, although too high enforcement parameters lead to unreachable theoretical optima.

Keywords: laboratory experiment, public good, matching mechanism, social norms, norm enforcement

JEL Classification: H41, C92

Suggested Citation

Reif, Christiane and Rübbelke, Dirk T. G. and Löschel, Andreas, Improving Voluntary Public Good Provision by a Non-Governmental, Endogenous Matching Mechanism: Experimental Evidence (October 1, 2014). ZEW - Centre for European Economic Research Discussion Paper No. 14-075. Available at SSRN: https://ssrn.com/abstract=2509205 or http://dx.doi.org/10.2139/ssrn.2509205

Christiane Reif (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim
Germany

Dirk T. G. Rübbelke

Technische Universität Bergakademie Freiberg ( email )

Freiberg, 09599
Germany

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

HOME PAGE: http://www.wiwi.uni-muenster.de/eroe

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