Are people conditionally cooperative? Evidence from a public goods experiment
Introduction
In public goods experiments one observes that people cooperate much more than predicted by standard economic theory assuming rational and selfish individuals. However, observed cooperation is heterogeneous and declining over time. One possible explanation, which is investigated in this paper, is the assumption that there are ‘conditional cooperators’, i.e. people who are willing to contribute more to a public good the more others contribute. Conditional cooperation can be considered as a motivation in its own or be a consequence of some fairness preferences like ‘altruism’, ‘warm-glow’, ‘inequity aversion’ or ‘reciprocity’. In the recent literature, such ‘non-standard’ motivations have received a lot of attention as explanations for the observed contribution behavior in public goods-type situations.1 In this paper, we report the results of an experiment that directly elicits subjects’ willingness for conditional cooperation.2 Our examination of the importance of conditional cooperation is based on a novel experimental design described in detail in Section 2. The central feature of our design is that we apply a variant of the so-called ‘strategy method’ (Selten, 1967) to elicit subjects’ preferences. Put differently, the subjects’ main task in the experiment is to indicate for each average contribution level of other group members how much they want to contribute to the public good.
In Section 3 we present the main results of our investigation. According to our data, roughly 50% of the subjects show conditional behavior such that the own contribution increases in the other group members’ average contribution. A third of the subjects can be characterized as free riders. The conditional contribution patterns of about 14% are ‘hump-shaped’.
Given the observed pattern of conditional cooperation, the often observed decay of cooperation in a repeated public goods game can be explained as a reaction to the other players’ contributions. In the concluding section we discuss this in more detail.
Section snippets
Experimental design and procedures
The decision situation in which the experiment was embedded is a standard linear public goods game (see Ledyard (1995)). Each of four individuals decides how to spend 20 tokens. A subject can either keep these tokens for herself or invest them into a so-called ‘project’. The pecuniary payoff function that was explained to the subjects was the following:For simplicity, the size of the project, i.e. the public good, is just given by the sum of all contributions gj to it. The
Results
Our main interest concerns subjects’ contribution decisions in the ‘contribution table’, i.e. their elicited willingness to contribute given the average contribution level of others. Fig. 1 contains our main result.
Although it was common knowledge that this game will be played only once, the average contribution vector is not characterized by complete free riding. The mean contribution (the bold line in Fig. 1) is clearly increasing in the average contribution of other group members. Thus, on
Concluding discussion: the decline of cooperation
Our results allow for a new, tentative, interpretation why we observe declining contributions in almost all public goods experiments. The key is given in Fig. 1. Firstly, a non-negligible fraction of subjects free rides regardless of others’ contribution. Secondly, even those who are conditionally cooperative display a bias in the self-serving direction in that they contribute less than the others do on average.9 Under the
Acknowledgements
This paper is part of the EU-TMR Research Network ENDEAR (FMRX-CT98-0238). Support from the Swiss National Science Foundation under the project no. 1214-051000.97 and from the MacArthur Foundation Network on Economic Environments and the Evolution of Individual Preferences and Social Norms is also gratefully acknowledged. We thank Armin Falk, Claudia Keser, Axel Ockenfels, Arthur Schram and seminar participants at the University of Amsterdam, the GEW workshop in Meissen and the European
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