Voting and transfer payments in a threshold public goods game

Christian Feige and Karl-Martin Ehrhart

No 73, Working Paper Series in Economics from Karlsruhe Institute of Technology (KIT), Department of Economics and Management

Abstract: In a laboratory experiment, we investigate if groups consisting of two heterogeneous player types (with different marginal contribution costs) can increase their total contributions and payoffs in a threshold public goods game if transfer payments are possible among the players. We find that transfer payments are indeed used in many groups to shift contributions from high-cost players to low-cost players, thereby not only increasing social welfare, but also equalizing payoffs. In a repeated setting with individual voluntary contributions and transfers, this redistribution effect takes a few rounds to manifest and high-cost players benefit the most in terms of payoffs. The same beneficial effect of transfer payments can also be achieved in a one-shot setting by having the groups vote unanimously on contributions and transfers of all players.

Keywords: threshold public good; transfer payments; experimental economics; unanimous voting; committee; heterogeneity (search for similar items in EconPapers)
JEL-codes: C92 D71 H41 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp, nep-gth and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kitwps:73

DOI: 10.5445/IR/1000050442

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