Common and private signals in public goods games with a point of no return

Werner Gueth (), Maria Levati and Ivan Soraperra
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Werner Gueth: Max Planck Institute of Economics
Authors registered in the RePEc Author Service: Werner Güth ()

No 09/2015, Working Papers from University of Verona, Department of Economics

Abstract: We provide experimental evidence on behavior in a public goods game featuring a so-called point of no return, meaning that if the group’s total contribution falls below this point all payoffs are reduced. Participants receive either common or private signals about the point of no return, and experience either high or low reductions in payoffs if insufficient contributions are made. Our data reveal that, as expected, contributions are higher if the cost of not reaching the threshold is high than if it is low. High signal values discourage contributions and endanger the likelihood of success when signals are common, but not when signals are private. In addition, successful coordination of contributions is less frequent in a control treatment featuring a standard provision point mechanism than in the experimental treatment where the payoff reduction factor is high, although the theoretical predictions of the two games are similar.

Keywords: Public goods; Provision point mechanism; Experiments; Signal (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in 9/2015

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Journal Article: Common and private signals in public goods games with a point of no return (2015)
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