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Endowment heterogeneity, incomplete information & institutional choice in public good experiments

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  • De Geest, Lawrence R.
  • Kingsley, David C.

Abstract

We study centralized and decentralized enforcement in social dilemmas with income inequality and incomplete information. Subjects are randomly assigned different endowments and, across treatments, these endowments can either be observed or not. After gaining experience with peer punishment and a simple central authority, groups voted on their preferred enforcement institution. Under complete information (endowments observed), most groups voted for peer punishment. Under incomplete information (endowments unobserved), most groups voted for central authority, and results suggest this preference was largely driven by subjects with lower incomes. Since free-riding could not be targeted when incomes were not observed, subjects with larger incomes tended to under-contribute, encouraging groups to self-impose central authority.

Suggested Citation

  • De Geest, Lawrence R. & Kingsley, David C., 2019. "Endowment heterogeneity, incomplete information & institutional choice in public good experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 83(C).
    • Handle: RePEc:eee:soceco:v:83:y:2019:i:c:s2214804319300424
    DOI: 10.1016/j.socec.2019.101478
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    Cited by:

    1. Rémi Suchon & Vincent Theroude, 2022. "Inequality and cooperation: meta-analytical evidence from Public Good Experiments," Post-Print halshs-04311249, HAL.
    2. De Geest, Lawrence R. & Kingsley, David C., 2021. "Norm enforcement with incomplete information," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 403-430.
    3. Abhijit Ramalingam & Brock V. Stoddard, 2020. "Old habits die hard: The experience of inequality and persistence of low cooperation," Working Papers 20-07, Department of Economics, Appalachian State University.

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    More about this item

    Keywords

    Public goods; Peer punishment; Central authority; Cooperation; Experiment; Institutions;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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