The Value of Non-Binding Announcements in Public Goods Experiments: Some Theory and Experimental Evidence

27 Pages Posted: 20 Dec 2004

See all articles by Michael Berlemann

Michael Berlemann

Ifo Institute Dresden

Marcus Dittrich

Deggendorf Institute of Technology; CESifo (Center for Economic Studies and Ifo Institute)

Gunther Markwardt

Dresden University of Technology - Faculty of Economics and Business Management

Date Written: December 2004

Abstract

In this paper we present three simple theoretical models to explain the influence of the possibility to make non-binding announcements on investment behaviour in public goods settings. Our models build on the idea that voluntary contributions to the supply of a public good might be motivated by some form of joy of giving. We show that the possibility to make non-binding announcements has a positive effect on cooperative behaviour, especially if individual announcements and factual investments are communicated to the players after each round. We also show that this result holds true even though the players have an incentive to overstate their true degrees of cooperativeness. Altogether, our theoretical considerations point in the direction that revealing as much information on individual intentions and factual behaviour as possible enhances cooperative behaviour. These conclusions are broadly confirmed by the results of a series of classroom experiments we present.

Keywords: public goods, announcements, joy of giving, experimental economics

JEL Classification: C92, D74, H41

Suggested Citation

Berlemann, Michael and Dittrich, Marcus and Markwardt, Gunther, The Value of Non-Binding Announcements in Public Goods Experiments: Some Theory and Experimental Evidence (December 2004). CESifo Working Paper Series No. 1352. Available at SSRN: https://ssrn.com/abstract=637667

Michael Berlemann (Contact Author)

Ifo Institute Dresden ( email )

Einsteinstrasse 3
01069 Dresden, 01062
Germany

Marcus Dittrich

Deggendorf Institute of Technology ( email )

Edlmairstraße 6 und 8
Deggendorf, Bavaria 94469
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Gunther Markwardt

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
D-01062 Dresden, Saxony
Germany
++49 (0)351/463-33972 (Phone)

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