Voluntary contributions to a multiple threshold public good

Abstract

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.

Citation

Chewning, E.G., Coller, M. and Laury, S.K. (2001), "Voluntary contributions to a multiple threshold public good", Research in Experimental Economics (Research in Experimental Economics, Vol. 8), Emerald Group Publishing Limited, Leeds, pp. 47-83. https://doi.org/10.1016/S0193-2306(01)08004-8