Heterogeneous Returns and Group Formations in the Public Goods Game

In a public goods game, it is usually assumed that people only consider their private returns when contributing to public goods. However, individuals in a same society may benefit from a public project differently. As a result, their willingness to contribute may vary. We experimentally analyze individuals contribution behavior in a repeated public goods game, where participants are categorized in two types, low or high, according with the returns they derive from the public good. In our design we consider different group formations, homogeneous and heterogeneous. All the members of a homogeneous group benefit from the public good equally, while in a heterogeneous group, the return levels are not equally distributed among the members. We show that the dif- ferences in contributions between the two types of players are larger in heterogeneously formed groups than the homogeneous ones, although the contribution differences are insignificant on ag- gregate level. These results underline the social aspect of public good provision and suggest that aggregation may misleadingly cover heterogeneities in the societies.