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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•
Just ask? Preference revelation and lying in a public goods experiment

[...]

Andrea Robbett1•
Middlebury College1
01 Sep 2019-Journal of Economic Behavior and Organization
TL;DR: In this paper, the authors studied the extent to which simply asking group members to report their demand-type promotes cooperation in a public goods experiment with private, unobservable incentives.
Abstract: This paper studies the extent to which simply asking group members to report their demand-type promotes cooperation in a public goods experiment with private, unobservable incentives The design uses a simple public goods game, in which group members differ in both their dominant strategy contributions and socially optimal contributions Treatments are conducted in which individuals either do not report their private payoff information, report only to group members, report to group members who can punish them, or report to a binding mechanism that charges them the socially optimal contribution for someone of their reported type In all cases, messages are non-verifiable and participants are told that they are free to lie When participants are able to report their type, either to their group members or to a binding mechanism, they contribute more When reporting to a mechanism, there is a positive effect initially that fades with repetition, while reporting to group members is particularly effective at sustaining cooperation over time Further, the misreporting of type is less frequent, considered more dishonest, and punished more harshly than free-riding Consistent with work showing that weak punishment can backfire, the punishment mechanism is underutilized in this environment and its presence negates the positive effect of sharing information
Pressure Groups and Public Goods Provision: Might society efficiently decide it has enough?

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Medardo Restrepo
01 Jan 2016
TL;DR: In this paper, the authors propose that individual preferences for a public good are reflected by different pressure groups to which people belong, and show how pressure groups can aid in deciding public goods provision.
Abstract: Since Samuelson’s 1954 decision rule, public goods models focus on achieving a unique efficient equilibrium that satisfies Samuelson’s condition. This paper presents a new perspective on this issue. We propose that individual preferences for a public good are reflected by different pressure groups to which people belong. Through a common agency problem using a two-stage menu auction game, we show how pressure groups can aid in deciding public goods provision. Depending on the disparities in the magnitude of the influences of the pressure groups, different efficient equilibria are possible (as in a Pareto contract curve in the Edgeworth’s exchange model).
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Getting Punnishment Right: Do Costly Monitoring or Redustributive Punishment Help?

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Talbot Page, Louis Putterman, Bruno Garcia
01 Jan 2008-Research Papers in Economics
TL;DR: In this paper, the authors introduce new treatments of a voluntary contribution mechanism with opportunities to punish, to see how contributions and punishments change when each dollar lost in punishment must be awarded to another team member and/or when obtaining information on individuals’ contributions is a costly choice.
Abstract: We introduce new treatments of a voluntary contribution mechanism with opportunities to punish, to see how contributions and punishments change when (a) each dollar lost in punishment must be awarded to another team member and/or when (b) obtaining information on individuals’ contributions is a costly choice. Conjectures that tying punishments to rewards might reduce punishment of high contributors (perverse punishment) or increase overall punishing are not completely born out, but innovation (a) nonetheless succeeds in making the net punishment of high contributors much less common because they receive enough rewards to offset punishment. A surprise finding is that innovation (b) also decreases the incidence of misdirected punishment, since high contributors do more monitoring than low ones while low contributors do most of the perverse punishing. Both innovations raise both contributions and earnings relative to the familiar VCM-with-punishment treatment.
Journal Article•DOI•
Contracting in the trust game

[...]

Juergen Bracht1, Juergen Bracht2•
University of Edinburgh1, University of Aberdeen2
22 Jul 2010-Social Science Research Network
TL;DR: In this article, a modified trust game is proposed, where the allocator can offer to pay the investor to cooperate, and the mechanism is successful at implementing efficient outcomes: participants manage to achieve an efficient outcome, when this is possible, two-thirds of the time.
Abstract: We present a simple mechanism that can be implemented in a simple experiment. In a modified trust game, the allocator can offer to pay the investor to cooperate. The mechanism is successful at implementing efficient outcomes: participants manage to achieve an efficient outcome, when this is possible, two—thirds of the time. While these results are encouraging, we find evidence that both concerns for fairness and motivation crowding out distort the incentives presented in the mechanism.
Journal Article•DOI•
Reverberation effect of communication in a public goods game

[...]

Dmitri Bershadskyy
27 Feb 2023-PLOS ONE
TL;DR: The authors analyzed the effect of face-to-face communication in a public goods laboratory experiment and found that there is a lasting positive effect on contributions even after communication was removed, referred to as the reverberation effect of communication.
Abstract: Using a public goods laboratory experiment, this paper analyzes the extent to which face-to-face communication keeps its efficiency gains even after its removal. This is important as communication in real world is costly (e.g. time). If the effect of communication is long-lasting, the number of communication periods could be minimized. This paper provides evidence that there is a lasting positive effect on contributions even after communication was removed. Yet, after the removal, the contributions are lower and abate over time to the previous magnitude. This is referred to as the reverberation effect of communication. As we do not observe an effect of endogenizing communication, the strongest driver of the size of the contributions is the existence of communication or its reverberation. Eventually, the experiment provides evidence for a strong end-game effect after communication was removed, insinuating communication does not protect from the end-game behavior. In total, the results of the paper imply, that the effects of communication are not permanent but communication should be repeated. Simultaneously, results indicate no need for permanent communication. Since communication is conducted using video-conference tools, we present results from a machine learning based analysis of facial expressions to predict contribution behavior on group level.
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

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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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