Real-time Monitoring in a Public-Goods Game

Abstract

We investigate a novel continuous-time mechanism in a public-goods game. Within a fixed period, a clock ensures that contributions increase simultaneously for every player, and players can choose when to stop, while their actions are observed by others in real time. We show both theoretically and experimentally that this mechanism is very effective in improving the contribution. Three critical factors may play a role: cheap talk, incremental commitment, and the clock. We further decompose these factors and find that cheap talk alone is not effective, while incremental commitment and the clock each account for 60% and 40% of the total effect, respectively.

Keywords: public goods, continuous time, incremental commitment, cheap talk

JEL Classification: C72, C92, D82