Love for Efficiency or Confusion? A QRE Analysis of Individual Contributions in a Public Good Game

Marcelo Tyszler Luca Corazzini
Authors registered in the RePEc Author Service: Marcelo Tyszler and Luca Corazzini

No 37, ISLA Working Papers from ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy

Abstract: Does the hypothesis of 'love for (group) efficiency' account for subjects' over-contribution in public good games? By using data from a VCM experiment with heterogeneous endowments and asymmetric information, we estimate a quantal response equilibrium (QRE) extension of a model in which subjects have preferences for group efficiency. Under the hypothesis of homogeneous population, the estimated parameter of subjects' concerns for efficiency vanishes and most of the variability of contributions seems to be explained by noisy behaviors. A different picture emerges when we introduce cross-subject heterogeneity in concerns for group efficiency. In this case, the majority of the subjects makes contributions that are compatible with the hypothesis of 'love for (group) efficiency'. A formal likelihood-ratio test strongly rejects the models not allowing for noise in contributions and homogeneous subjects for the more general QRE extension with heterogeneous preferences for (group) efficiency coupled with noise in subjects' behavior.

Keywords: Love for (Group) Efficiency; Voluntary Contribution Mechanism; Quantal Response Equilibrium; Laboratory Experiment. (search for similar items in EconPapers)
JEL-codes: C92 D03 D71 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-08
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-pbe
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