How to subsidize contributions to public goods: Does the frog jump out of the boiling water?

Theo Offerman and Ailko van der Veen

European Economic Review, 2015, vol. 74, issue C, 96-108

Abstract: According to popular belief, frogs are boiled to death when the water is heated gradually. In this paper, we investigate how humans respond to a very slow versus a very steep increase of a subsidy on contributions to a public good. In an experiment, we vary the mode of the increase (gradual versus quick). When the subsidy is raised to an intermediate level, we see a modest effect in either treatment. When the subsidy is raised to a substantial level, there is a strong effect of a quick increase and a modest effect of a gradual increase in the subsidy.

Keywords: Public good; Subsidy; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D03 H41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:74:y:2015:i:c:p:96-108

DOI: 10.1016/j.euroecorev.2014.11.007

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