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How to subsidize contributions to public goods: Does the frog jump out of the boiling water?

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  • Offerman, Theo
  • van der Veen, Ailko

Abstract

According to popular belief, frogs are boiled to death when the water is heated gradually. In this paper, we investigate how humans respond to a very slow versus a very steep increase of a subsidy on contributions to a public good. In an experiment, we vary the mode of the increase (gradual versus quick). When the subsidy is raised to an intermediate level, we see a modest effect in either treatment. When the subsidy is raised to a substantial level, there is a strong effect of a quick increase and a modest effect of a gradual increase in the subsidy.

Suggested Citation

  • Offerman, Theo & van der Veen, Ailko, 2015. "How to subsidize contributions to public goods: Does the frog jump out of the boiling water?," European Economic Review, Elsevier, vol. 74(C), pages 96-108.
    • Handle: RePEc:eee:eecrev:v:74:y:2015:i:c:p:96-108
    DOI: 10.1016/j.euroecorev.2014.11.007
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    4. Charness, Gary & Gneezy, Uri & Henderson, Austin, 2018. "Experimental methods: Measuring effort in economics experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 74-87.

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    More about this item

    Keywords

    Public good; Subsidy; Experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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