Cooperation Versus Free-Riding in a Threshold Public Goods Setting: A Classroom Experiment

22 Pages Posted: 15 May 2003

See all articles by Melanie Marks

Melanie Marks

Longwood College - College of Business and Economics

David Lehr

Longwood College - College of Business and Economics

Raymond T. Brastow

Longwood College

Date Written: February 24, 2003

Abstract

We present a classroom public goods experiment based on a provision point mechanism, where subjects must make an all or nothing decision about providing the public good. We find that, as a teaching tool, this design is superior to traditional prisoners' dilemma games in which there exists a dominant strategy to free-ride. The provision point mechanism design creates a multiple equilibrium setting while retaining free-riding incentives. Since the provision point design does not incorporate a dominant strategy to free-ride, students must individually choose a level of cooperation (or free-riding) without the benefits of communication. Students quickly discover problems of achieving an optimal social outcome, since free-riding can potentially eliminate benefits to the entire group. We have found this experiment to be an excellent vehicle for introducing game theoretic problems of public good provision and for engendering meaningful discussion of real world applications.

JEL Classification: A2, C9, H4

Suggested Citation

Marks, Melanie and Lehr, David and Brastow, Raymond T., Cooperation Versus Free-Riding in a Threshold Public Goods Setting: A Classroom Experiment (February 24, 2003). Available at SSRN: https://ssrn.com/abstract=385380

Melanie Marks

Longwood College - College of Business and Economics ( email )

Farmville, VA
United States
434-395-2372 (Phone)
434-395-2203 (Fax)

David Lehr

Longwood College - College of Business and Economics ( email )

Farmville, VA
United States
434.395.2459 (Phone)

Raymond T. Brastow (Contact Author)

Longwood College ( email )

School of Business and Economics
Farmville, VA
United States
804-395-2370 (Phone)
804-395-2203 (Fax)

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