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Journal Article•DOI•

A simple mechanism for the efficient provision of public goods - experimental evidence

Josef Falkinger1, Ernst Fehr2, Simon Gächter2, Rudolf Winter-Ebmer3•
University of Regensburg1, University of Zurich2, Johannes Kepler University of Linz3
01 Mar 2000-The American Economic Review (American Economic Association)-Vol. 90, Iss: 1, pp 247-264
TL;DR: In this paper, a series of experiments designed to investigate the factor of incentive mechanisms in the case of private provisions of public goods is presented. But the results showed that the proposed incentive mechanism is very promising.
Abstract: The author reports on a series of experiments designed to investigate the factor of incentive mechanisms in the case of private provisions of public goods. In the Control treatment, there was no mechanism so that subjects faced strong free-riding incentives. In the so-called Falkinger mechanism treatment, the author implemented the Falkinger mechanism. The studies explored the impact of the mechanism in different economic environments. Results showed that the proposed incentive mechanism is very promising. Section I of the paper introduces the mechanism to be examined. Section II discusses the experimental design. Empirical results are provided in Section III, and Section IV interprets these results followed by a summary.

Summary (1 min read)

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Summary

  • In the Control treatment, there was no mechanism so that subjects faced strong free-riding incentives.
  • The studies explored the impact of the mechanism in different economic environments.
  • Results showed that the proposed incentive mechanism is very promising.
  • Empirical results are provided in Section III, and Section IV interprets these results followed by a summary.

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University of Zurich
Zurich Open Repository and Archive
Winterthurerstr. 190
CH-8057 Zurich
http://www.zora.unizh.ch
Year: 2000
A simple mechanism for the efficient provision of public goods:
experimental evidence
Falkinger, Josef; Fehr, Ernst; Gächter, Simon; Winter-Ebmer, Rudolf
Falkinger, Josef; Fehr, Ernst; Gächter, Simon; Winter-Ebmer, Rudolf. A simple mechanism for the efficient
provision of public goods: experimental evidence. American Economic Review 2000, 90(1):247-264.
Postprint available at:
http://www.zora.unizh.ch
Posted at the Zurich Open Repository and Archive, University of Zurich.
http://www.zora.unizh.ch
Originally published at:
American Economic Review 2000, 90(1):247-264
Falkinger, Josef; Fehr, Ernst; Gächter, Simon; Winter-Ebmer, Rudolf. A simple mechanism for the efficient
provision of public goods: experimental evidence. American Economic Review 2000, 90(1):247-264.
Postprint available at:
http://www.zora.unizh.ch
Posted at the Zurich Open Repository and Archive, University of Zurich.
http://www.zora.unizh.ch
Originally published at:
American Economic Review 2000, 90(1):247-264
A simple mechanism for the efficient provision of public goods:
experimental evidence
Abstract
The author reports on a series of experiments designed to investigate the factor of incentive mechanisms
in the case of private provisions of public goods. In the Control treatment, there was no mechanism so
that subjects faced strong free-riding incentives. In the so-called Falkinger mechanism treatment, the
author implemented the Falkinger mechanism. The studies explored the impact of the mechanism in
different economic environments. Results showed that the proposed incentive mechanism is very
promising. Section I of the paper introduces the mechanism to be examined. Section II discusses the
experimental design. Empirical results are provided in Section III, and Section IV interprets these results
followed by a summary.
Citations
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Journal Article•DOI•
Intragroup competition in public good games: The role of relative performance incentives and risk attitudes

[...]

Annarita Colasante1, Aurora García-Gallego1, Nikolaos Georgantzis1, Andrea Morone2, Andrea Morone1, Tiziana Temerario2 •
James I University1, University of Bari2
01 Oct 2019-Journal of Public Economic Theory
TL;DR: In this article, the authors proposed a rank-order voluntary contribution mechanism and found that the resulting competition for a better return significantly increases contributions, and that the positive effect of return differences on contribution levels depends on an individual's return-to-risk sensitivity.
Abstract: We analyze a public good game (PGG) with intragroup competition in which, generally but not always, the dominant strategy is to not contribute; therefore, free riding is the unique Nash equilibrium, not achieving Pareto efficiency. We propose a PGG setup where subjects' contributions are rewarded with different individual returns following a rank-order voluntary contribution mechanism. It is found that the resulting competition for a better return significantly increases contributions. This effect is sensitive to the salience of return differences rewarding higher contributions. Furthermore, the positive effect of return differences on contribution levels depends on an individual's return-to-risk sensitivity as elicited through an independent risk elicitation task.

8 citations

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Natural Resource Federalism: Preferences Versus Connectivity for Patchy Resources

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Christopher Costello1, Christopher Costello2, Daniel T. Kaffine3•
University of California, Santa Barbara1, National Bureau of Economic Research2, University of Colorado Boulder3
01 Sep 2018-Environmental and Resource Economics
TL;DR: In this article, the authors examine the efficiency of centralized versus decentralized management of spatially connected renewable resources when users have heterogeneous preferences for conservation versus extraction, and show that the first is most efficiently handled with centralized planning while the second is best tackled with decentralized management.
Abstract: We examine the efficiency of centralized versus decentralized management of spatially-connected renewable resources when users have heterogeneous preferences for conservation versus extraction. Resource mobility induces a spatial externality, while spatial preference heterogeneity drives a wedge between users’ privately optimal extraction rates. We first address these market failures analytically and show that the first is most efficiently handled with centralized planning while the second is best tackled with decentralized management. Except in special cases, neither approach will be first best, but which arises as second best depends on the relative strength of preference heterogeneity versus spatial mobility of the resource. We illustrate the theory, and test its robustness, with a numerical example.

8 citations

Journal Article•DOI•
The public goods game with a new form of shared reward

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Chunyan Zhang1, Zengqiang Chen1•
Nankai University1
05 Oct 2016-Journal of Statistical Mechanics: Theory and Experiment
TL;DR: This work proposes a shared reward, in the form of extensive benefits, to extend the traditional definition of the public goods game and suggests that a tunable parameter exists, above a certain critical value of which natural selection favors cooperation over defection.
Abstract: Altruistic contribution to a common good evenly enjoyed by all group members is hard to explain because of the greater benefits obtained by a defector than a cooperator. A variety of mechanisms have been proposed to resolve the collective dilemma over the years, including rewards for altruism. An underrated and easily ignored phenomenon is that the altruistic behaviors of cooperators not only directly enhance the benefits of their game opponents, but also indirectly produce good influences to other allied members in their surroundings (e.g. relatives or friends). Here we propose a shared reward, in the form of extensive benefits, to extend the traditional definition of the public goods game. Mathematical analysis using the Moran process helps us to obtain the fixation probability for one 'mutant' cooperator to invade and dominate the whole defecting population. Results suggest that a tunable parameter exists, above a certain critical value of which natural selection favors cooperation over defection. In addition, analytical results with replicator dynamics show that this critical value influencing the evolution of altruism is closely correlated with the population size, the gaming group size and the synergy factor of the public goods game. These results, based on an extended notion of shared reward and extensive benefits, are expected to provide novel explanations for the emergence of altruistic behaviors.

8 citations

Behavioral and Experimental Economics

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Jean-Robert Tyran
01 Jan 2015
TL;DR: Experimental economics offers an alternative data collection method to standard empirical methods in economics that is directly designed to study specific research questions as discussed by the authors, where the data collection process is under full control by the researcher, who can fine-tune the characteristics of the economic environment under scrutiny (incentives, dissemination of information, context and framing, etc.) to his or her own purposes.
Abstract: Experimental Economics offers an alternative data collection method to standard empirical methods in Economics that is directly designed to study specific research questions. In the practice of Experimental Economics the data collection process is under full control by the researcher, who can fine-tune the characteristics of the economic environment under scrutiny (incentives, dissemination of information, context and framing, etc...) to his or her own purposes. The methods of Experimental Economics rely on carefully controlled designs, in ways similar to Experimental Psychology or Experimental Physics. However, the ability to control for unwanted influences and unobserved phenomena is much weaker in the social than in the natural sciences, and in this course we will discuss the limits of our ability to construct an ideal social science experiment.

8 citations

Journal Article•DOI•
Individual contributions, provision point mechanisms and project cost information effects on contingent values: Findings from a field validity test.

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Maria Christantoni1, Dimitris Damigos1•
National Technical University of Athens1
15 May 2018-Science of The Total Environment
TL;DR: The results indicate that there are no statistically significant differences in willingness to pay (WTP) estimates between the CVM and PPM treatments nor between the P PM and the PPM-INF treatments, but the results are mixed compared to previous research efforts.

8 citations

References
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Book•
An introduction to the bootstrap

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Bradley Efron1, Robert Tibshirani•
South Dakota School of Mines and Technology1
01 Jan 1993
TL;DR: This article presents bootstrap methods for estimation, using simple arguments, with Minitab macros for implementing these methods, as well as some examples of how these methods could be used for estimation purposes.
Abstract: This article presents bootstrap methods for estimation, using simple arguments. Minitab macros for implementing these methods are given.

37,183 citations

Book•
Nonparametric statistics for the behavioral sciences

[...]

Sidney Siegel
01 Jan 1956
TL;DR: This is the revision of the classic text in the field, adding two new chapters and thoroughly updating all others as discussed by the authors, and the original structure is retained, and the book continues to serve as a combined text/reference.
Abstract: This is the revision of the classic text in the field, adding two new chapters and thoroughly updating all others. The original structure is retained, and the book continues to serve as a combined text/reference.

35,552 citations

Journal Article•DOI•
z-Tree: Zurich toolbox for ready-made economic experiments

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Urs Fischbacher
07 Feb 2007-Experimental Economics
TL;DR: Z-Tree as mentioned in this paper is a toolbox for ready-made economic experiments, which allows programming almost any kind of experiments in a short time and is stable and easy to use.
Abstract: z-Tree (Zurich Toolbox for Ready-made Economic Experiments) is a software for developing and conducting economic experiments. The software is stable and allows programming almost any kind of experiments in a short time. In this article, I present the guiding principles behind the software design, its features, and its limitations.

9,760 citations

Journal Article•DOI•
A theory of fairness, competition and cooperation

[...]

Ernst Fehr1, Klaus M. Schmidt2•
University of Zurich1, Ludwig Maximilian University of Munich2
01 Aug 1999-Quarterly Journal of Economics
TL;DR: This paper showed that if some people care about equity, the puzzles can be resolved and that the economic environment determines whether the fair types or the selesh types dominate equilibrium behavior in cooperative games.
Abstract: There is strong evidence that people exploit their bargaining power in competitivemarkets butnot inbilateral bargainingsituations. Thereisalsostrong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selesh types dominate equilibrium behavior.

8,783 citations

Journal Article•DOI•
The Pure Theory of Public Expenditure

[...]

Paul A. Samuelson
01 Nov 1954-The Review of Economics and Statistics
TL;DR: In this paper, the authors propose a method to use the information of the user's interaction with the service provider in order to improve the quality of the service provided to the user.
Abstract: Классическая работа лаурета Нобелевской премии по экономике Пола Самуэльсона, заложившая основу современной теории общественных благ. В статье формулируются условия выбора оптимального объема предоставления общественного блага, ныне присутствующие в любом учебнике микроэкономики и экономики общественного сектора.

6,105 citations

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