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On the performance of rule-based contribution schemes under endowment heterogeneity

Martin Kesternich (), Andreas Lange () and Bodo Sturm

No 14-055, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We experimentally test different rule-based contribution mechanisms in a repeated 4-player public goods game with endowment heterogeneity and compare them to a VCM, distinguishing between a random- and an effort-based allocation of endowments. We find that endowment heterogeneities limit the efficiency gains from minimum contribution rules under random allocation. Under effort-based allocations, substantial efficiency gains relative to a VCM occur, though being largely driven by significant reductions of contributions in VCM. By apparently influencing the perception of fair burden sharing, the endowment allocation procedure crucially impacts voluntary contributions under VCM, while the rule-based mechanisms generate stable efficiency levels, even though endowment heterogeneity substantially limits the ability of rule-based mechanisms to achieve the potential efficiency gains.

Keywords: public good; institutions; minimum contribution rules; cooperation; endowment heterogeneity (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cdm
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Journal Article: On the performance of rule-based contribution schemes under endowment heterogeneity (2018) Downloads
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