May the Forcing Be with You: Experimental Evidence on Mandatory Contributions to Public Goods

Abstract

Evidence in the applied literature indicates that policies intended to stimulate positive externalities via coercion can backfire. For example, Davis (2008) finds that when in 1989, the government of Mexico City tried to control air pollution by banning most drivers from driving their vehicle one weekday per week, many drivers bought another, used, high emissions car, which ended up worsening pollution. In order to test for such effects, we run a repeated public goods experiment where subjects are randomly forced to contribute. All group members are informed about forcing after it happens. We find that when random forcing is present, intended contributions are significantly larger in absolute terms. Moreover, contributions decrease significantly after being forced to contribute, and tend to increase after another group member is forced to contribute. Hence, our results indicate that forcing mechanisms have indirect effects that must be taken into account when assessing the overall impact of policies aimed at stimulating positive externalities.

Keywords: unintended consequences, public good game, laboratory experiment, reciprocity

JEL Classification: C92, D04, H41