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Cognitive ability and the house money effect in public goods games

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  • Julian Hackinger

    (Technical University of Munich, Chair of Economics)

Abstract

I experimentally investigate the relation of endowment origin, cognitive abilities (as measured by the Cognitive Reflection Test, CRT), and co-operation in a one-shot linear public goods game. The results show that subjects’ contributions depend on an interplay of cognitive abilities and endowment origin. A house money effect exists only for subjects with low CRT scores. They contribute more when income was allocated to them and less when income was obtained by effort. In contrast, subjects with high CRT scores contribute the same amount independent of income type. The findings have implications for redistribution, team production, and experimental designs.

Suggested Citation

  • Julian Hackinger, 2024. "Cognitive ability and the house money effect in public goods games," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 10(2), pages 393-414, December.
    • Handle: RePEc:spr:jesaex:v:10:y:2024:i:2:d:10.1007_s40881-024-00163-9
    DOI: 10.1007/s40881-024-00163-9
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    More about this item

    Keywords

    Public goods game; Cognitive reflection; House money; Real effort; Income source;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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