Voluntary Cooperation in Local Public Goods Provision: An Experimental Study
41 Pages Posted: 16 Jan 2016
Date Written: January 5, 2016
In a circular neighborhood with each member having a left and a right neighbor, individuals choose two contribution levels, one each for the public good shared with the left, respectively right, neighbor. This allows for general free riders, who do not contribute at all, and general cooperators, who contribute to both local public goods, as well as for differentiating contributors who contribute in a discriminatory way. Although the two-person local public good games are structurally independent, we investigate whether intra- as well as inter-personal spillover effects arise. We find that participants do not behave as if they are playing two separate public good games, hence that both inter-personal and intra-personal behavioral spillovers occur. To investigate more clearly motives for voluntary cooperation via analyzing individual adaptations in playing two structurally independent games, we design treatments differing in cooperation incentives (i.e. different MPCR) and structural (a)symmetry of local public goods. We find that when the MPCR is asymmetric, free-riding occurs less, and contributions are more stable over time. We also find that contributions in the asymmetric treatment when MPCR is low are higher than contributions in symmetric treatments with higher MPCR.
Keywords: Public Good, Neighborhoods, Experiments, Voluntary Contribution Mechanism
JEL Classification: C91, C72, H41
Suggested Citation: Suggested Citation