Anomalies: Cooperation

1988 ◽  
Vol 2 (3) ◽  
pp. 187-197 ◽  
Author(s):  
Robyn M Dawes ◽  
Richard H Thaler
Keyword(s):  
Game Theory ◽  
Economic Analysis ◽  
Public Good ◽  
Laboratory Experiments ◽  
Free Riding ◽  
Important Case ◽  
Public Good Provision ◽  
Good Provision

Much economic analysis -- and virtually all game theory -- starts with the assumption that people are both rational and selfish. The predictions derived from this assumption of rational selfishness are, however, violated in many familiar contexts. In this column and the next one, the evidence from laboratory experiments is examined to see what has been learned about when and why humans cooperate. This column considers the particularly important case of cooperation vs. free riding in the context of public good provision.

scholarly journals Announcements of Support and Public Good Provision

2017 ◽  
Vol 107 (12) ◽  
pp. 3760-3787 ◽  
Author(s):  
Judd B. Kessler
Keyword(s):  
Public Goods ◽  
Field Experiment ◽  
Prosocial Behavior ◽  
Public Good ◽  
Large Scale ◽  
Laboratory Experiments ◽  
Public Good Provision ◽  
Scale Field ◽  
Large Scale Field ◽  
Good Provision

Providing information about contributions to public goods is known to generate further contributions. However, it is often impossible to provide verifiable information on contributions. Through a large-scale field experiment and a series of laboratory experiments, I show that nonbinding announcements of support for a public good encourage others to contribute, even when actual contributions might not or cannot be made. Providing a way to easily announce support for a charity increases donations by $865 per workplace fundraising campaign (or 16 percent of average giving). I discuss implications for understanding prosocial behavior and for organizations aiming to increase contributions to public goods. (JEL C93, D64, D83, H41, L31)

scholarly journals Local Institutions and the Dynamics of Community Sorting

2014 ◽  
Vol 6 (3) ◽  
pp. 136-156 ◽  
Author(s):  
Andrea Robbett
Keyword(s):  
Public Good ◽  
Laboratory Experiments ◽  
Self Organization ◽  
Public Good Provision ◽  
Tax Policies ◽  
Local Institutions ◽  
Heterogeneous Preferences ◽  
Efficient Outcome ◽  
Good Provision

This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization when residents can move freely between locations. I find that institutions requiring all residents of a community to pay equal taxes enable subjects to sort into stable, homogeneous communities. Though sorted, residents often fail to attain the provision level best suited for them. When residents can vote for local tax policies with ballots, along with their feet, each community converges to the most efficient outcome for its population. (JEL C73, D72, H21, H41, H71, H73)

scholarly journals A Note on the Valuation of Collective Goods: Overlooked Input Market Free Riding for Non-Individually Incrementable Goods

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Philip E Graves
Keyword(s):  
Willingness To Pay ◽  
Public Goods ◽  
Public Good ◽  
Free Riding ◽  
Public Good Provision ◽  
Free Rider Problem ◽  
Marginal Willingness To Pay ◽  
Demand Revelation ◽  
Good Provision ◽  
Input Markets

Abstract For at least fifty years economists have argued that vertically-aggregated marginal willingness to pay, when set equal to marginal provision cost, will result in optimal public good provision levels. This methodological approach would be expected to yield an exact analog, in terms of optimal levels of public good provision, to efficient provision of private goods in a perfect market setting. There is, however, a potentially serious flaw in the approach as actually practiced, since initial incomes are implicitly–and wrongly–taken to be optimal. From a given income, the output demand revelation problem has long been recognized–that there will be difficulty inferring true demands for public goods at that income (the traditional `free rider' problem). But what has failed to receive widespread recognition among theoreticians, and especially among practitioners, is that there will also be a concomitant `input demand revelation' problem. In any situation where workers cannot individually increment a class of goods by increasing their income (e.g. public goods), they will have no incentive to generate the income that would have been devoted to that class of goods. They will only generate income that is optimal to pay the higher taxes or prices associated with whatever initial public goods levels are provided. As a consequence, the benefit-cost practitioner will, even if somehow able to accurately guess marginal willingness-to-pay out of current income, observe only one apparent optima. There are an infinite number of such optima, one for each level of free riding in input markets, where aggregated marginal willingness-to-pay will appear to equal marginal provision cost. The one true Samuelson `optimum optimorum' occurs when there is free riding in neither output nor input markets (that is, when the `full' demand revelation problem is solved). As a consequence, pure public goods, as well as other `non-incrementable' goods and goods for which non-use values are of importance will be undervalued, hence under-provided. Evidence is presented that the problem raised here might be of importance, undermining the practical significance of the Coase theorem vis-à-vis Pigouvian taxation.

On the Limits of Cheap Talk for Public Good Provision

2012 ◽  
Author(s):  
Francisco J. M. Costa ◽  
Humberto Moreira
Keyword(s):  
Public Good ◽  
Cheap Talk ◽  
Public Good Provision ◽  
Good Provision

scholarly journals Social Pressure in Networks Induces Public Good Provision

Games ◽  
2021 ◽  
Vol 12 (1) ◽  
pp. 4
Author(s):  
David Jimenez-Gomez
Keyword(s):  
Public Good ◽  
Small Group ◽  
Dynamic Model ◽  
Network Topology ◽  
Social Pressure ◽  
Public Good Provision ◽  
Public Good Game ◽  
The Public ◽  
Best Response ◽  
Good Provision

I develop a dynamic model with forward looking agents, and show that social pressure is effective in generating provision in a public good game: after a small group of agents start contributing to the public good, other agents decide to contribute as well due to a fear of being punished, and this generates contagion in the network. In contrast to earlier models in the literature, contagion happens fast, as part of the best response of fully rational individuals. The network topology has implications for whether contagion starts and the extent to which it spreads. I find conditions under which an agent decides to be the first to contribute in order to generate contagion in the network, as well as conditions for contribution due to a self-fulfilling fear of social pressure.

scholarly journals The Evolution of Networks and Local Public Good Provision: A Potential Approach

Games ◽  
2021 ◽  
Vol 12 (3) ◽  
pp. 55
Author(s):  
Markus Kinateder ◽  
Luca Paolo Merlino
Keyword(s):  
Public Good ◽  
Nash Equilibria ◽  
Potential Game ◽  
Public Good Provision ◽  
Local Public Good ◽  
Steady State Distribution ◽  
State Distribution ◽  
Long Run ◽  
Split Graphs ◽  
Good Provision

In this paper, we propose a game in which each player decides with whom to establish a costly connection and how much local public good is provided when benefits are shared among neighbors. We show that, when agents are homogeneous, Nash equilibrium networks are nested split graphs. Additionally, we show that the game is a potential game, even when we introduce heterogeneity along several dimensions. Using this result, we introduce stochastic best reply dynamics and show that this admits a unique and stationary steady state distribution expressed in terms of the potential function of the game. Hence, even if the set of Nash equilibria is potentially very large, the long run predictions are sharp.

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