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Favor Trading in Public Good Provision

Sarah Andrea Jacobson () and Ragan Petrie ()
Authors registered in the RePEc Author Service: Dalia S. Hakura and Peter J. Montiel

No 2010-19, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: Grassroots fundraising leverages favor trading in social networks to support the provision of a public good. We use a laboratory experiment to study the elements and dynamics of this type of institution. Peer-to-peer reciprocity is important, and having the ability to practice targeted reciprocity in our experiment increases contributions to the public good by 14%. Subjects reward group members who have previously been generous to them and withhold rewards from ungenerous group members. When someone is rendered unable to benefit from favor trading, he gives much less to the public good than he does in other settings. People thus excluded from the “circle of giving” provide a clean and strict test of indirect reciprocity, since they cannot benefit from a norm of cooperation. Contrary to previous studies, we do not observe indirect reciprocity.

Keywords: public goods; reciprocity; experiment; peer-to-peer fundraising (search for similar items in EconPapers)
JEL-codes: C91 H41 D01 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mig
Date: 2010-10, Revised 2013-04
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Working Paper: Favor Trading in Public Good Provision (2013) Downloads
Working Paper: Favor Trading in Public Good Provision (2012) Downloads
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