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Altruism and Noisy Behavior in One-Shot Public Goods Experiments

Jacob Goeree (), Charles Holt () and Susan Laury

Virginia Economics Online Papers from University of Virginia, Department of Economics

Abstract: An increase in the common marginal value of a public good has two effects: it increases the benefit of a contribution to others, and it reduces the net cost of making a contribution. These two effects can be decomposed by letting a contribution have an "internal" return for oneself that differs from the "external" return to someone else. We use this framework in a series of one-shot public goods games in which subjects make choices in ten treatments with no feedback. Contributions are generally increasing in the external return and group size, which suggests that altruism in this context is not simply of the "warm glow" variety, i.e. giving only for the sake of giving. Contributions are also increasing in the internal return, indicating that decisions are sensitive to the costs of helping others. We specify a logit equilibrium model in which individuals are motivated by own and others' earnings, and in which choice is stochastic. Maximum likelihood estimates of altruism and logit error parameters are significant and of reasonable magnitudes, and the resulting two-parameter model tracks the pattern of contributions across the ten treatments remarkably well.

Keywords: public goods; voluntary contributions; marginal per capita return; internal return; external return; bounded rationality; logit equilibrium; altruism; nonlinear altruism; warm glow altruism; one shot game (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1999-09
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-ind and nep-pub
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