The Effects of Group Interaction in a Public Goods Experiment With Two Exchanges

Yoav Wachsman

No 200205, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Consumers can often allocate resources to the provision of local public goods and to the provision of global public goods. This paper reports a public goods experiment in which participants allocated tokens to a local exchange with a relatively high marginal payoff and a global exchange with a lower marginal payoff but a higher potential payoff. The experiment consisted of three treatments with varying degree of interaction amongst the members of the local groups. When participants were not allowed to interact they allocated more tokens to the global exchange. This result suggests that individuals care about the potential payoff of the group exchange more than about the marginal payoff of the exchange. When we allowed members of each local group to communicate, they kept almost no tokens for themselves and attempted to coordinate their contributions to the global exchange with members of the other local group.

Keywords: Voluntary Contributions Mechanism; Public Goods Experiment; Group Identity; Communication; Coordination (search for similar items in EconPapers)
JEL-codes: C92 D71 H41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2002
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Citations: View citations in EconPapers (10)

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