VOLUNTARY CONTRIBUTION GAMES: EFFICIENT PRIVATE PROVISION OF PUBLIC GOODS

This paper reports on a series of laboratory experiments designed to evaluate a mechanism for the voluntary provision of public good. The public good is provided if the total contributions meet or exceed a threshold and all contributions are returned if the public good is not provided. The members of the group all know the threshold, the incomes, and the valuations assigned the public good by all other members. The results support the prediction that this mechanism will yield Pareto efficient outcomes and suggest that economic agents adopt strategies which form equilibria satisfying certain refinements to the Nash equilibrium.     

THE EFFECT OF REWARDS AND SANCTIONS IN PROVISION OF PUBLIC GOODS

A growing number of field and experimental studies focus on the institutional arrangements by which individuals are able to solve collective action problems. Important in this research is the role of reciprocity and institutions that facilitate cooperation via opportunities for monitoring, sanctioning, and rewarding others. Sanctions represent a cost to both the participant imposing the sanction and the individual receiving the sanction. Rewards represent a zero-sum transfer from participants giving to those receiving rewards. We contrast reward and sanction institutions in regard to their impact on cooperation and efficiency in the context of a public goods experiment . ( JEL C92)     

SALIENCE AND THE GOVERNMENT PROVISION OF PUBLIC GOODS

This paper examines how behavioral biases caused by salient events affect the government provision of public goods. We develop a theory in which competing communities lobby the government for allocations of a local public good. Salient events bias community demands for the good, which results in inefficient allocations. We empirically test this theory using salient wildfires and government projects to reduce wildfire risk. Wildfires reduce risk to nearby communities, but may increase demand for fuels management projects because of biases induced by salient wildfires. We find that communities experiencing recent nearby fires are more likely to receive fuels management projects. (JEL D03, H41, Q24)     

A CLEAR AND PRESENT MINORITY: HETEROGENEITY IN THE SOURCE OF ENDOWMENTS AND THE PROVISION OF PUBLIC GOODS

We conduct public goods experiments in which participant groups are heterogeneous in regards to the source of their endowments. We find that this dimension of heterogeneity significantly reduces contributions to the public good, yielding strong support for the Nash prediction of minimal contributions. These minimal contributions arise in environments in which there exists a clear minority in terms of source of endowments. We discuss these results in light of current research on the influence of heterogeneous populations on public goods provision and redistributive policies. (JEL C9, D63, H4, J15)     

ON PUBLIC AND PRIVATE IN J. M. COETZEE

This essay reads J. M. Coetzee's Diary of a Bad Year in its historical context (the moment of the US war in Iraq, Abu Graib, Guantanamo and the apparent triumph of neoliberalism), while also probing the problems at stake in the practice of contextual reading and of taking the work as staging the opinions of the biographical Coetzee. The essay teases out not only the question of whether Coetzee should be seen as a public intellectual (the short but not entirely satisfactory answer is ‘no’), but also how the terms ‘public’ and ‘private’ play out in his oeuvre and are helpful in pondering Coetzee's approach to questions of genre, censorship and authorship.     

VOTING, PUNISHMENT, AND PUBLIC GOODS

Researchers have found that voting can help increase voluntary contributions to a public good—provided enforcement through a third party. Not all collective agreements, however, guarantee third-party enforcement. We design an experiment to explore whether a voting rule with and without endogenous punishment increases contributions to a public good. Our results suggest that voting by itself does not increase cooperation, but if voters can punish violators, contributions increase significantly. While costly punishment increases contributions at the price of lower efficiency, overall efficiency for a voting-with-punishment rule still exceeds the level observed for a voting-without-punishment rule. ( JEL C92, D72, H41)     

COMPETITION AND COOPERATION IN A PUBLIC GOODS GAME: A FIELD EXPERIMENT

We explore the effects of competitive and cooperative motivations on contributions in a field experiment. A total of 10,000 potential political donors received solicitations referencing past contribution behavior of members of the competing party (competition treatment), the same party (cooperative treatment), or no past contribution information (control). We first theoretically analyze the effect of these treatments on the contribution behavior of agents with different social preferences in a modified intergroup public good (IPG) game. Then, we report the empirical results: Contribution rates in the competitive, cooperative, and control treatments were 1.45%, 1.08%, and 0.78%, respectively. With the exception of one large contribution, the distribution of contributions in the competitive treatment first order stochastically dominates that of the cooperative treatment. Qualitatively, it appears that the cooperative treatment induced more contributions around the common monetary reference point, while the competitive treatment led to more contributions at twice this amount. These results suggest that eliciting competitive rather than cooperative motivations can lead to higher contributions in IPG settings. (JEL D72, H41, C93)     

HOW THE SCOPE AND METHOD OF PUBLIC FUNDING AFFECT WILLINGNESS TO PAY FOR PUBLIC GOODS

This article examines the sensitivity of survey measures ofwillingness to pay for public goods. Visitors to a science museumin San Francisco were asked to provide estimates of their willingnessto pay for saving seabirds from oil spills and for teachingEnglish to immigrants under various experimental conditions.Willingness to pay was substantially reduced by a seeminglyinnocuous reminder about how many individuals would be affectedby a tax or would be asked to contribute to a given cause. Thisfinding, which cannot be explained by standard economic interpretationsof willingness to pay, is consistent with previous studies showingthat subtle changes in question order and wording can affectthe nature of the responses.     

COMPARISON OF CHARACTERISTICS OF PRIVATE PRODUCT PRODUCING ORGANIZATIONS AND PUBLIC SERVICE ORGANIZATIONS

This analysis explores whether propositions and empirical findings of contemporary theories of organizations directly apply to both private product producing organizations (PPOs) and public human service organizations (PSOs). Eight central characteristics are compared: organizational values and goals, incentives, organizational structure, raw materials, power-dependency relationships, technology, revenues and accountability, and environmental constraints. Major differences between PPOs and PSOs suggest that organization theories developed from findings about PPOs inadequately describe PSOs. Comparative research would demonstrate the need for new models of these organizational types. Since these types derive from contradictory assumptions and have differing characteristics, each should be sampled to the other's exclusion and generalizations made only to that type. The findings refute the popular assumption that all PSOs can privatize with equal success This is not a failure by PSOs to achieve PPOs' standards; rather the types pursue different values and accomplish different goals.     

RANK‐ORDER COMPETITION IN THE VOLUNTARY PROVISION OF IMPURE PUBLIC GOODS

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free‐riding in impure public goods. In our Rank‐Order Voluntary Contribution Mechanism (Rank‐Order‐VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment, Rank‐Order‐VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing. (JEL C91, H41)     

PROVIDING GLOBAL PUBLIC GOODS: ELECTORAL DELEGATION AND COOPERATION

This study experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects one delegate who can freely decide on each group member's contribution to the global public goods. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions for our delegation mechanism, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the selfish benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by theory. It is driven by conditional cooperation of delegates across groups. Since one of the potential sources of the resulting inefficiency is the polycentric nature of global public goods provision together with other‐regarding preferences, we use the term P‐inefficiency to describe our finding. (JEL C92, D72, H41)     

BELIEFS ABOUT OTHER-REGARDING PREFERENCES IN A SEQUENTIAL PUBLIC GOODS GAME

Experimental evidence is used to deduce players' beliefs about their opponents' concern for others. The experiment is a sequential public good provision game with a provision point and two different refund rules. A theory is constructed to show how early contributions should change with the refund rule depending on the first mover's beliefs about subsequent players' other-regarding preferences. The evidence rejects the hypothesis that early players believe that their opponents are inequality averse and also rejects the hypothesis that early players are concerned with security. The evidence is consistent with beliefs in spite, reciprocity, or a concern for security. (JEL H41 , C90 , D63 , D64 )     

INNOVATION: ITS PUBLIC AND PRIVATE ASPECTS AND SOME OF THEIR EMPIRICAL IMPLICATIONS FOR MERGERS

Innovators may have incentives to incur the expense of the search for new knowledge even if others can use the results without contributing to the costs of the search for them. Why? Assume firms choose their actions independently. Assume new knowledge is a free public good: a firm can make the product at lower cost even if it spends nothing on research, if another does the research. The most plausible noncooperative equilibrium in this situation is stochastic: firms will decide what to do on the basis of a random device. The theory determines the probability that the firm spends nothing, or something, on research. In consequence, no firm can be certain that a rival will do the research; no firm can be certain of becoming a free rider. In consequence, there will be no relation on average between returns on research-outlays and size of outlays; but the yield on research always will be positive. Innovation can lead to differences among firms, but these differences should not persist, as firms can gain by eliminating them. In a non-cooperative equilibrium, where firms have different cost conditions, the allocation of output among them is inefficient. Such inefficiency can be eliminated if information about methods of production is sold, say by way of licensing. But royalty receipts are a very small fraction of total revenues, even in research and development intensive industries such as chemicals and scientific instruments. Merger is another avenue of cooperation. The theory which assumes research results are private predicts a positive relation between merger activity and technical change. Empirical evidence for the 1879–1930 inverval supports this prediction.     

THEORIES OF COMMITMENT, ALTRUISM AND RECIPROCITY: EVIDENCE FROM LINEAR PUBLIC GOODS GAMES

Theories of commitment, altruism, and reciprocity have been invoked to explain and describe behavior in public goods and social dilemma situations. Commitment has been used to explain behaviors like water conservation and voting. Altruism has been applied to explain contributions to charities and intergenerational transfers and bequests. Reciprocity has been invoked to explain gift exchange and labor market decisions. This paper describes a set of experiments, which distinguish between these competing theories by testing their comparative statics predictions in a linear public goods setting. Results provide strong support for reciprocity theories over either theories of commitment or of altruism. ( JEL C9, D64, H41, C72)     

TRANSPARENCY IN MARKETS FOR EXPERIENCE GOODS: EXPERIMENTAL EVIDENCE

We propose an experimental design to investigate the role of information disclosure in the market for an experience good. The market is served by a duopoly of firms that choose both the quality and the price of their product. Consumers differ in their taste for quality and choose from which firm to buy. We compare four different treatments in which we vary the degree to which consumers are informed about quality. Contrary to theoretical predictions, firms do not differentiate quality under full information. Rather, both tend to offer products of similar, high quality, entailing more intense price competition than predicted by theory. Under no information, we observe a “lemons” outcome where quality is low. At the same time, firms manage to maintain prices substantially above marginal cost. In two intermediate treatments, quality is significantly higher than the no‐information level, and there is evidence that prices become better predictors of quality. Taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect. (JEL L15, C91, D82)     

SCHOOL SELECTION PREFERENCES OF PUBLIC AND PRIVATE UNIVERSITY MSW STUDENTS: A RETROSPECTIVE STUDY

A convenience sample of MSW students responded to an Internet-based survey (N=2,289) retrospectively reporting their reasons for enrolling in a specific social work graduate program. Reponses indicate that MSW students who enroll in private graduate programs are younger and reported reputation-related and employment-related reasons for specific school selection more often than students enrolled in public schools. Students enrolled in public schools reported location-related reasons as more important. Bifurcation of the applicant pool into private and public preference-groups presents a recruitment challenge. Other findings include that enrollment rates are substantially higher than previously anticipated, which suggests that most applicants to graduate social work programs are likely to be admitted if they apply to multiple programs.     

PUBLIC MUNIFICENCE FOR PRIVATE BENEFIT: LITURGIES IN CLASSICAL ATHENS

Liturgies or public services became less efficient as a source of state revenue in Classical Athens over the democratic period. This is illustrated in a model in which each citizen, knowing his own wealth and the probability distribution of the visible wealth of others, can engage in costly wealth concealment to improve his chances of avoiding a liturgy. Relative to a wealth tax, liturgies are efficient as long as their performers can acquire sufficient private benefits through public munificence. The observed decline in these benefits over the democratic period reduced or eliminated this relative efficiency.