Purpose – This chapter tests the effectiveness of different institutions to fundraise for environmental projects at tourism destinations.Methodology – We conduct a series…
Purpose – This chapter tests the effectiveness of different institutions to fundraise for environmental projects at tourism destinations.
Methodology – We conduct a series of experiments with tourists visiting the Island of Majorca, Spain, and test the fundraising capacity of a voluntary donation scheme, two tax levels, and a matching instrument. In the first treatment of our experiment, tourists have the opportunity to make a voluntary donation to a local environmental organization involved in environmental projects. In a high-tax and low-tax treatment, tourists are taxed some proportion of their initial endowment and then are allowed to make voluntary contributions from their remaining endowment. In a final treatment, the experimenters match, one-for-one, any voluntary donations.
Findings – We test the crowding-out hypothesis of taxes over voluntary environmental donations and find imperfect crowding-out (from 60% to 65% for different tax levels).We also explore potential crowding-in of matching instruments (widely used in nontourism settings for fundraising campaigns), but do not find any support for it.
Practical Implications – Our results support the conclusion that it would be reasonable to use voluntary donation programs and tourism taxes complementarily (instead of independently), to increase fundraising for environmental purposes at tourism destinations.
Recent experiments show that feedback transmission can mitigate opportunistic behavior in repeated social dilemmas. Two nonexcludable explanations have been investigated…
Recent experiments show that feedback transmission can mitigate opportunistic behavior in repeated social dilemmas. Two nonexcludable explanations have been investigated: strategic signaling and nonmonetary sanctioning. This literature builds on the intuition that under both partner matching (where the same groups of players interact many times) and stranger matching (where groups change continuously), feedback may work as a nonmonetary sanctioning device, but only the former also allows for strategic signaling. Empirical evidence on the two explanations is mixed. Moreover, the usual design may give rise to confounding matching protocol effects.
My experiment provides a novel empirical testbed for different channels by which feedback – costless disapproval points – may affect behavior in a repeated public goods game. In particular, it is based on a random matching scheme that neutralizes the confounding effects of different matching protocols on behavior.
The transmission of feedback is found to foster prosocial behavior. The data favor the nonmonetary sanctioning explanation rather than the signaling hypothesis.
This study provides a novel set of evidence that (i) communication may mitigate selfishness in social dilemmas and (ii) the source of this phenomenon may be linked to the emotional reaction that communication evokes in humans.
Charitable lotteries represent one of today's most popular fund-raising schemes. This study begins by developing theory examining the optimal design of a charitable…
Charitable lotteries represent one of today's most popular fund-raising schemes. This study begins by developing theory examining the optimal design of a charitable lottery. We show that any prize distribution is only optimal for a group of n symmetric agents with given risk preference. However, there exist multiple prize distributions that generate contributions approaching the optimal level over a range of individual risk posture. We test our theory using a battery of experimental treatments. Our results suggest that lotteries dominate the voluntary contribution mechanism (VCM) in terms of total dollars raised. Moreover, the performance of lotteries weakly depends on individual risk preference.
Many public goods may be characterized as having multiple provision points. These goods are provided in discrete rather than continuous quantities and only if specified…
Many public goods may be characterized as having multiple provision points. These goods are provided in discrete rather than continuous quantities and only if specified minimal levels of funding are attained. This chapter describes an experiment that examines allocations to a multiple provision point public good. Subjects determine the level of the good provided using a voluntary contribution mechanism. We vary the number of provision points (from one to five), leading to increasing degrees of separation between the social optimum and the Nash equilibria. In the final rounds of single-provision-point sessions, efficient outcomes are frequently observed In contrast, efficient outcomes are only rarely observed in multiple-threshold sessions. In our first treatment, a second provision point is added, resulting in a decrease in the Nash equilibrium and no change in the efficient outcome. Contributions fall relative to the single provision point sessions, but remain above the lower provision point. We then add a third higher, provision point that increases the group optimum contribution but leaves the Nash equilibria unchanged. Surprisingly, contributions decline even more sharply in this treatment and are often below the lowest threshold. In all of our treatments, however, efficiency gains over full free-riding are observed in many rounds.
Alchian and Demsetz's (1972) classic paper models team production as a public good. They claim detection of individual effort levels, rather than aggregate effort levels…
Alchian and Demsetz's (1972) classic paper models team production as a public good. They claim detection of individual effort levels, rather than aggregate effort levels, reduces shirking (free riding). This chapter experimentally tests this claim. Participants are informed either about the individual contributions of others on their team or only about their team's total contribution. Average group contributions in the two treatments are the same. However, group contributions under individual feedback have a significantly higher variance than those under total feedback. Implications of these results for team production are discussed.
The Balinese have been successful for centuries in sustaining cooperation among the members of local communities in order to provide public goods through individual contributions. The purpose of this paper is to review and highlight the Balinese mechanism's remarkable features.
The paper surveyed the experimental literature on public goods and highlighted those features of the Balinese tradition that have been proven to be both effective in the experimental laboratory and successful in deterring free‐riding on the field.
The most prominent features discussed are decentralization, democratic decision making, the use of two currencies, supervision, and the possibility of imposing severe sanctions for free‐riding.
The paper's findings not only can help to preserve the high level of cooperation among inhabitants in Bali threatened by migration flows and the increasingly intense reliance on the market mechanism, but they also provide general insights both for theoreticians and practitioners on how to create successful communities. In addition, the literature review sheds light on several features of public‐good games that have not been satisfactorily explored yet by experimental economists.
The novelty of the paper's approach lies in looking at the Balinese tradition through the glasses of mechanism design theory and aligning the related findings of experimental economics in order to understand its success and problems.
This paper examines binding multi-round commitments (MRCs) to the group account in a repeated voluntary contributions mechanism (VCM) game. Before each five-round…
This paper examines binding multi-round commitments (MRCs) to the group account in a repeated voluntary contributions mechanism (VCM) game. Before each five-round interval, subjects in a four-person group are given the option to commit a portion of their endowments to the group account for each of the next five rounds. Decision rounds proceed, with each subject's commitment acting as the binding minimum of his group-account allocation for each round. The opportunity to make MRCs does not increase mean allocations to the group account relative to a control treatment. However, commitments do have implications for reciprocal behavior within groups, leading to higher outcome variances across groups in the MRCs treatment.
Purpose and approach – We examine theoretically and experimentally how unequal abilities to contribute affect incentives and efficiency when players compete for membership…
Purpose and approach – We examine theoretically and experimentally how unequal abilities to contribute affect incentives and efficiency when players compete for membership in stratified groups based on the contributions they make. Players have either a low or a high endowment. Once assigned to a group based on their group contribution, players share equally in their group’s collective output. Depending on the parameters, the mechanism has several distinct equilibria that differ in efficiency.
Findings – Somewhat counter to conventional expectation our theoretical analysis indicates that as long as certain assumptions are satisfied, efficiency increases rather than decreases the more abilities to contribute differ. The analysis also suggests various follow-up experiments about equilibrium selection, tacit coordination, and the effect of unequal abilities in systems with endogenous grouping. We conduct an experiment that shows that subjects tacitly coordinate the mechanism’s asymmetric payoff-dominant equilibrium with precision; this precision is robust to a change in the structure and complexity of the game.
Implications – The results suggest that people respond to merit-based grouping in a natural way and that competitive contribution-based grouping encourages public contributions even when abilities to contribute differ, which is the case in all communities and societies.
This paper replicates four highly cited, classic lab experimental studies in the provision of public goods. The studies consider the impact of marginal per capita return…
This paper replicates four highly cited, classic lab experimental studies in the provision of public goods. The studies consider the impact of marginal per capita return and group size; framing (as donating to or taking from the public good); the role of confusion in the public goods game; and the effectiveness of peer punishment. Considerable attention has focused recently on the problem of publication bias, selective reporting, and the importance of research transparency in social sciences. Replication is at the core of any scientific process and replication studies offer an opportunity to reevaluate, confirm or falsify previous findings. This paper illustrates the value of replication in experimental economics. The experiments were conducted as class projects for a PhD course in experimental economics, and follow exact instructions from the original studies and current standard protocols for lab experiments in economics. Most results show the same pattern as the original studies, but in all cases with smaller treatment effects and lower statistical significance, sometimes falling below accepted levels of significance. In addition, we document a “Texas effect,” with subjects consistently exhibiting higher levels of contributions and lower free-riding than in the original studies. This research offers new evidence on the attenuation effect in replications, well documented in other disciplines and from which experimental economics is not immune. It also opens the discussion over the influence of unobserved heterogeneity in institutional environments and subject pools that can affect lab results.