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Communication in a threshold public goods game with ambiguity: Anomalies and regularities

Matteo M. Marini, Aurora García-Gallego () and Luca Corazzini ()
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Aurora García-Gallego: LEE & Department of Economics, Universitat Jaume I, Castellón, Spain
Luca Corazzini: Department of Economics, University of Venice ‘Cà Foscari’, Venice, Italy

No 2018/03, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: This paper offers evidence on the impact of communication on public good provision within the context of ambiguous public good values and noisy information. We run a laboratory experiment with two treatments, where the control variable is pre-play communication in the form of unrestricted text chat. A binary threshold public goods game with four-person groups, threshold of three and partner matching is at the core of the design. We introduce a novel provision mechanism which, in case the threshold is reached, consists in a binary lottery producing either a stated high value or a stated low value for the whole group with unknown probability. Before the contribution decision, private signals for the actual value of the public good are provided. The results at the group level emphasize that, in accordance with related literature, communication significantly increases public good provision by reducing inefficiency that comes from wasteful under-contribution. Nevertheless, despite the presence of a valid coordination device, the players in the chat treatment seem to neglect the free-rider issue and often end up over-contributing, in contrast with previous scientific findings. After chat analysis, we discover that the agreements on all members contributing are often successful, arguably thanks to pronounced group identity generated by the partner matching. Moreover, we propose the common fate hypothesis as further explanation of the massive over-contribution. Since the players show greater concern for ambiguity than for the free-rider problem, we speculate about a possible crowding out effect of the former on the latter.

Keywords: communication; ambiguity; private signal; threshold public goods game (search for similar items in EconPapers)
JEL-codes: C92 D81 D82 D83 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-gth
Date: 2018
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