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Endowment heterogeneity, incomplete information & institutional choice in public good experiments

Lawrence R. De Geest and David C. Kingsley

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2019, vol. 83, issue C

Abstract: We study centralized and decentralized enforcement in social dilemmas with income inequality and incomplete information. Subjects are randomly assigned different endowments and, across treatments, these endowments can either be observed or not. After gaining experience with peer punishment and a simple central authority, groups voted on their preferred enforcement institution. Under complete information (endowments observed), most groups voted for peer punishment. Under incomplete information (endowments unobserved), most groups voted for central authority, and results suggest this preference was largely driven by subjects with lower incomes. Since free-riding could not be targeted when incomes were not observed, subjects with larger incomes tended to under-contribute, encouraging groups to self-impose central authority.

Keywords: Public goods; Peer punishment; Central authority; Cooperation; Experiment; Institutions (search for similar items in EconPapers)
JEL-codes: C92 D02 H41 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:83:y:2019:i:c:s2214804319300424

DOI: 10.1016/j.socec.2019.101478

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