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Analysing Group Contract Design Using a Lab and a Lab-in-the-Field Threshold Public Good Experiment

J.A. Bouma, Binh Nguyen, Eline van der Heijden () and J.J. Dijk
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J.A. Bouma: Tilburg University, Center For Economic Research
Binh Nguyen: Tilburg University, Center For Economic Research

No 2018-049, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This paper presents the results of a threshold public goods game experiment with heterogeneous players. The experiment is designed in close collaboration with the Dutch association of agri-environmental farmer collectives. Subjects are recruited at a university (“the lab”) and a farm management training centre (“lab-in-the-field”). The treatments have two different distribution rules which are varied in a within-subjects manner. After subjects have experienced both, they can vote for one of the two rules: either a differentiated bonus that results in equal payoff for all, or an undifferentiated, equal share of the group bonus. In a between-subjects manner, subjects can vote for a (minimum or average) threshold or are faced with an exogenous threshold. The results indicate that exogenous thresholds perform better, possibly because the focal point they provide facilitates coordination. With regard to the two distribution rules, the results are mixed: average contributions and payoffs are higher in the lab under the ‘equal-payoff’ rule, but there is no significant difference between the two in the lab-in-the-field, possibly because contributions in the lab-in-the-field are much less efficient. Overall, our results suggest that environmental payment schemes should not only consider farmer heterogeneity in the design of group contracts, but pay explicit attention to coordination problems as well.

Keywords: Threshold public good games; endogenous choice; lab-in-the-field; collective agri-envorenmental management; group contracts; distribution rules; heterogeneous subjects (search for similar items in EconPapers)
JEL-codes: H41 C92 C93 D70 Q57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cdm, nep-cta, nep-exp and nep-gth
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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