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Information defaults in repeated public good provision

Jia Liu, Axel Sonntag and Daniel Zizzo

No 12, IHS Working Paper Series from Institute for Advanced Studies

Abstract: We present an experiment that models a repeated public good provision setting where the policy maker or manager does not have perfect control over information flows. Rather, information seeking can be affected by changing the information default as well as the price of information. The default is one either with or without information about others’ contributions, and having information comes with a positive, zero or negative financial incentive. When information comes without a financial incentive or even is financially beneficial, almost all subjects choose to have the information, but around a third have the information even when this is costly. Moreover, a default of not having information about the others’ contributions leads to a slower unravelling of cooperation, independent of the financial incentives of having information. This slower unravelling is explained by the beliefs about others’ contributions in these treatments. A secondary informational default effect appears to take place. When the default is no information, subjects do not seek information more often but, conditional on financial incentives, they tend to believe that more other subjects seek information.

Keywords: Information defaults; public good; value of information (search for similar items in EconPapers)
JEL-codes: C91 D83 H41 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2020-01
New Economics Papers: this item is included in nep-exp
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http://www.ihs.ac.at/publications/eco/ihswps-12.pdf First version, 2019 (application/pdf)

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Working Paper: Information defaults in repeated public good provision (2019) Downloads
Working Paper: Information defaults in repeated public good provision (2019) Downloads
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