Give Everybody a Voice! The Power of Voting in a Public Goods Experiment with Externalities

Christoph Engel and Bettina Rockenbach ()
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Bettina Rockenbach: University of Cologne

No 2014_16, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: We study the effect of voting when insiders’ public goods provision may affect passive outsiders. Without voting insiders’ contributions do not differ, regardless of whether outsiders are positively or negatively affected or even unaffected. Voting on the recommended contribution level enhances contributions if outsiders are unaffected and internalizes the negative externality by lowering contributions when outsiders are negatively affected. Remarkably, voting does not increase contributions when it would be most desirable, i.e. with a positive externality. Here, participants vote for high contributions, yet compliance is poor. Unfavorable payoff comparisons to the outsiders that gain a windfall profit drive contributions down.

Keywords: experiment; Public Good; externality; voting (search for similar items in EconPapers)
JEL-codes: C91 C92 D03 D43 D62 H23 H41 L13 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-pol
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2014_16

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