Real-time Monitoring in a Public Goods Game

33 Pages Posted: 30 Mar 2020

See all articles by Simin He

Simin He

Shanghai University of Finance and Economics - School of Economics

Xun Zhu

Shanghai University of Finance and Economics, School of Economics

Date Written: March 4, 2020

Abstract

Public goods games are prevalent in economics and are known to be challenging to resolve. In this study, we introduce a novel incremental commitment mechanism in a linear public goods game, where contribution increases during a fixed time interval, and people can choose when to stop their contribution from increasing, while their actions are perfectly monitored. We shows both theoretically and experimentally that it is a very powerful mechanism to help achieve almost full contribution. Moreover, we compare this mechanism with other mechanisms under similar real-time monitoring environment, and find that when the incremental commitment feature is removed, the mechanism becomes ineffective. We contribute to the current theoretical and empirical literature on improving cooperation in public goods games by introducing a novel mechanism, which can be potentially extended to other social dilemma situations.

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

JEL Classification: C72, C92, D82

Suggested Citation

He, Simin and Zhu, Xun, Real-time Monitoring in a Public Goods Game (March 4, 2020). Available at SSRN: https://ssrn.com/abstract=3548418 or http://dx.doi.org/10.2139/ssrn.3548418

Simin He (Contact Author)

Shanghai University of Finance and Economics - School of Economics ( email )

777 Guoding Road
Shanghai, 200433
China

Xun Zhu

Shanghai University of Finance and Economics, School of Economics ( email )

China

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