No Refund, No Problem: Refund Institutions in a Combined Linear-Threshold Public Good Game

Sarah Jacobson and John Spraggon

No 2025_114, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: "We use a lab experiment to study a combined linear-threshold public good game, with linear returns to contributions and an additional higher return if a threshold is met. We experimentally vary handling of contributions that do not meet the threshold. Contributions are high, with almost all groups reaching the threshold. Refund institutions matter, but only a little: contributions are only weakly higher on average if insufficient contributions are automatically refunded than if they cannot be refunded. However, optional refunds chosen ex post perform relatively poorly. Risk averse people contribute less, but when a refund is possible, more risk tolerant people reduce their contributions relative to risk averse people. An online survey-experiment shows that people perceive refunds in this institution as desirable from a donor’s perspective, though a donor’s taking advantage of a threshold is perceived as non-normative, especially in a naturalistic charity context."

Keywords: public goods games; threshold public goods; lab experiment; social preferences; risk preferences (search for similar items in EconPapers)
Pages: 50
Date: 2025-08-01
New Economics Papers: this item is included in nep-exp and nep-gth
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