House Money Effects in Public Good Experiments

Jeremy Clark

No 263796, Department of Economics Discussion Papers from University of Canterbury - New Zealand

Abstract: Are contributions involuntary public good experiments inflated because subjects are given money for their initial endowments? There is evidence that people receiving small, one time "windfall gains" have a high marginal propensity to consume them, and when doing so, exhibit greater riskseeking behaviour. Similar effects may be present in voluntary contribution experiments, causing subjects to contribute more to public goods than they would if using their own money. The effect ofwindfall money is tested by comparing VCM contribution rates when subjects supply their own endowments with those when endowments are provided, while holding constant the distribution of total promised earnings.

Keywords: Consumer/Household Economics; Public Economics (search for similar items in EconPapers)
Pages: 21
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Persistent link: https://EconPapers.repec.org/RePEc:ags:canzdp:263796

DOI: 10.22004/ag.econ.263796

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