An Application of the English Clock Market Mechanism to Public Goods Games

Maria Vittoria Levati () and Tibor Neugebauer

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We conducted a laboratory study with a public goods game in which contributions are not submitted all at once but incrementally as coordinated in real time by a clock. Individuals press a button as soon as the clock equals their willingness to contribute. This public goods institution exploits the idea that people are conditionally cooperative (i.e., they match at least the minimum contribution of the others) rather than opportunistic in order to implement the Pareto-optimal outcome. By providing information about the point at which subjects stopped further contributions we found that the decision of a subject to stop contributing induced an immediate reaction of the other group members. As a consequence, the individual contributions were closely related to each other and a fairer income distribution was achieved than in the standard case in which only aggregated information was supplied after each period.

Keywords: Experimental Economics; Public Goods; Voluntary Contributions; Conditional Cooperation; Adaptive Behaviour. (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-gth, nep-mic and nep-pbe
Date: 2001-11
Note: The authors would like to thank seminar participants at Amsterdam, Berlin, Lisbon, Paris, Turin, York and especially Werner Güth, John Bone, Rachel Croson and Frans van Winden for valuable comments. Financial support from the EU-TMR Research Network ENDEAR (FMRX-CT98-0238) is gratefully acknowledged.
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Journal Article: An Application of the English Clock Market Mechanism to Public Goods Games (2004)
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