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Asymmetric heterogeneities and the role of transfers in a public goods experiment

Author

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  • Koessler, Ann-Kathrin
  • Müller, Julia
  • Zitzelsberger, Sonja

Abstract

Previous experimental research has shown that cooperation is especially challenging in situations involving heterogeneous actors. Here, we investigate the effect of allowing unconditional transfers in a public goods game when actors differ asymmetrically in their endowments and productivity levels. Under this setup, full efficiency, in terms of highest maximum group payoff, can only be achieved with the full transfer of resources from the players with high endowment and low productivity to the players with high productivity but low endowment. We show that, in this setting, the availability of transfers enhances public good provision and cooperation. The voluntary transfer serves as a powerful cooperative signal, leading to high contribution rates among the recipients. However, if the transfer possibility is given but not used, cooperation erodes.

Suggested Citation

  • Koessler, Ann-Kathrin & Müller, Julia & Zitzelsberger, Sonja, 2023. "Asymmetric heterogeneities and the role of transfers in a public goods experiment," European Economic Review, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:eecrev:v:159:y:2023:i:c:s0014292123001897
    DOI: 10.1016/j.euroecorev.2023.104561
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    More about this item

    Keywords

    Public goods game; Heterogeneity; Transfers; Inequality; Cooperation;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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