IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2012-015.html
   My bibliography  Save this paper

Community Projects: An Experimental Analysis of a Fair Implementation Process

Author

Listed:
  • Simona Cicognani

    (School of Social Sciences, University of Trento, Italy)

  • Anna D'Ambrosio

    (School of Social Sciences, University of Trento, Italy)

  • Werner Güth

    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Simone Pfuderer

    (School of Social Sciences, University of Trento, Italy)

  • Matteo Ploner

    (Cognitive and Experimental Economics Laboratory, University of Trento, Italy)

Abstract

We define and experimentally test a public provision mechanism that meets three basic ethical requirements and allows community members to influence, via monetary bids, which of several projects is implemented. For each project, participants are assigned personal values, which can be positive or negative. We provide either complete or only private information about others' personal values. This produces two distinct public provision games which are experimentally implemented and analysed for various projects. In spite of the complex experimental task, participants do not rely on truth-telling as an obvious and simple heuristic whose general acceptance would result in fair and efficient outcomes. Rather, they yield to strategic underbidding. Although underbidding is affected by projects' characteristics, the provision mechanism seems quite functional.

Suggested Citation

  • Simona Cicognani & Anna D'Ambrosio & Werner Güth & Simone Pfuderer & Matteo Ploner, 2012. "Community Projects: An Experimental Analysis of a Fair Implementation Process," Jena Economics Research Papers 2012-015, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2012-015
    as

    Download full text from publisher

    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2012/wp_2012_015.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gigerenzer, Gerd & Todd, Peter M. & ABC Research Group,, 2000. "Simple Heuristics That Make Us Smart," OUP Catalogue, Oxford University Press, number 9780195143812.
    2. Rondeau, Daniel & D. Schulze, William & Poe, Gregory L., 1999. "Voluntary revelation of the demand for public goods using a provision point mechanism," Journal of Public Economics, Elsevier, vol. 72(3), pages 455-470, June.
    3. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 583-601.
    4. James Andreoni, 1995. "Warm-Glow versus Cold-Prickle: The Effects of Positive and Negative Framing on Cooperation in Experiments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 1-21.
    5. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    6. Sonnemans, Joep & Schram, Arthur & Offerman, Theo, 1998. "Public good provision and public bad prevention: The effect of framing," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 143-161, January.
    7. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    8. Varian, Hal R., 1974. "Equity, envy, and efficiency," Journal of Economic Theory, Elsevier, vol. 9(1), pages 63-91, September.
    9. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    10. Pamela Schmitt, 2004. "On Perceptions of Fairness: The Role of Valuations, Outside Options, and Information in Ultimatum Bargaining Games," Experimental Economics, Springer;Economic Science Association, vol. 7(1), pages 49-73, February.
    11. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    12. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    13. Kagel, John H. & Kim, Chung & Moser, Donald, 1996. "Fairness in Ultimatum Games with Asymmetric Information and Asymmetric Payoffs," Games and Economic Behavior, Elsevier, vol. 13(1), pages 100-110, March.
    14. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-755, September.
    15. Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-366, April.
    16. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    17. Cadsby, Charles Bram & Maynes, Elizabeth, 1999. "Voluntary provision of threshold public goods with continuous contributions: experimental evidence," Journal of Public Economics, Elsevier, vol. 71(1), pages 53-73, January.
    18. Marks, Melanie & Croson, Rachel, 1998. "Alternative rebate rules in the provision of a threshold public good: An experimental investigation," Journal of Public Economics, Elsevier, vol. 67(2), pages 195-220, February.
    19. Werner Güth & Hartmut Kliemt, 2011. "Procedurally Fair Provision of Public Projects An axiomatic characterization," Jena Economics Research Papers 2011-016, Friedrich-Schiller-University Jena.
    20. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
    21. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati, 2011. ""One man's meat is another man's poison." An experimental study of voluntarily providing public projects that raise mixed feelings," Jena Economics Research Papers 2011-034, Friedrich-Schiller-University Jena.
    22. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agnes Bäker & Werner Güth & Kerstin Pull & Manfred Stadler, 2012. "On the Context-Dependency of Inequality Aversion - Experimental Evidence and a Stylized Model -," Jena Economics Research Papers 2012-023, Friedrich-Schiller-University Jena.
    2. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2012. "Public projects benefiting some and harming others: three experimental studies," Jena Economics Research Papers 2012-034, Friedrich-Schiller-University Jena.
    3. Güth, Werner, 2014. "Endogenous community formation and collective provision – A procedurally fair mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 389-395.
    4. Güth, Werner & Koukoumelis, Anastasios & Levati, M. Vittoria & Ploner, Matteo, 2014. "Providing revenue-generating projects under a fair mechanism: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 410-419.
    5. Güth, Werner & Vittoria Levati, M. & Montinari, Natalia, 2014. "Ranking alternatives by a fair bidding rule: A theoretical and experimental analysis," European Journal of Political Economy, Elsevier, vol. 34(C), pages 206-221.
    6. Federica Alberti & Werner Güth & Kei Tsutsui, 2020. "Experimental effects of institutionalizing co-determination by a procedurally fair bidding rule," Working Papers in Economics & Finance 2020-10, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati, 2011. ""One man's meat is another man's poison." An experimental study of voluntarily providing public projects that raise mixed feelings," Jena Economics Research Papers 2011-034, Friedrich-Schiller-University Jena.
    2. Urs Fischbacher & Werner Güth & M. Vittoria Levati, 2011. "Crossing the Point of No Return: A Public Goods Experiment," Jena Economics Research Papers 2011-059, Friedrich-Schiller-University Jena.
    3. Deb, Rahul & Gazzale, Robert S. & Kotchen, Matthew J., 2014. "Testing motives for charitable giving: A revealed-preference methodology with experimental evidence," Journal of Public Economics, Elsevier, vol. 120(C), pages 181-192.
    4. Tatsuki Homma & Ryosuke Iba & Junyi Shen & Takuma Wakayama & Hirofumi Yamamura & Takehiko Yamato, 2022. "The pivotal mechanism versus the voluntary contribution mechanism: an experimental comparison," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(3), pages 429-505, April.
    5. Douadia Bougherara & Laurent Denant-Boèmont & David Masclet, 2007. "Creating vs. maintaining threshold public goods in conservation policies," Post-Print halshs-00175879, HAL.
    6. Luca Corazzini, Christopher Cotton, Paola Valbonesi, 2012. "Salience, Coordination and Cooperation in Contributing to Threshold Public Goods," ISLA Working Papers 44, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
    7. James Andreoni & Laura Gee, 2015. "Gunning for efficiency with third party enforcement in threshold public goods," Experimental Economics, Springer;Economic Science Association, vol. 18(1), pages 154-171, March.
    8. repec:clg:wpaper:2014-43 is not listed on IDEAS
    9. David Johnson & Sebastian Goerg & Jonathan Rogers, "undated". "Can't Touch This! Similarity And Willingness to Keep "Dirty Money"," Working Papers 2014-81, Department of Economics, University of Calgary, revised 10 Nov 2014.
    10. Ubeda, Paloma, 2014. "The consistency of fairness rules: An experimental study," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 88-100.
    11. Nicklisch, Andreas & Wolff, Irenaeus, 2012. "On the nature of reciprocity: Evidence from the ultimatum reciprocity measure," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 892-905.
    12. Erik O. Kimbrough & Alexander Vostroknutov, 2016. "Norms Make Preferences Social," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 608-638, June.
    13. Engel, Christoph & Goerg, Sebastian J., 2018. "If the worst comes to the worst: Dictator giving when recipient’s endowments are risky," European Economic Review, Elsevier, vol. 105(C), pages 51-70.
    14. Gerber, Anke & Neitzel, Jakob & Wichardt, Philipp C., 2013. "Minimum participation rules for the provision of public goods," European Economic Review, Elsevier, vol. 64(C), pages 209-222.
    15. Friedel Bolle & Yves Breitmoser & Jana Heimel & Claudia Vogel, 2012. "Multiple motives of pro-social behavior: evidence from the solidarity game," Theory and Decision, Springer, vol. 72(3), pages 303-321, March.
    16. Bose, Bijetri & Rabotyagov, Sergey, 2018. "Provision of public goods using a combination of lottery and a provision point," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 99-115.
    17. Felix Koelle, 2012. "Heterogeneity and Cooperation in Privileged Groups: The Role of Capability and Valuation on Public Goods Provision," Cologne Graduate School Working Paper Series 03-08, Cologne Graduate School in Management, Economics and Social Sciences.
    18. Kandul, Serhiy & Lanz, Bruno & Reins, Evert, 2023. "Reciprocity and gift exchange in markets for credence goods," Games and Economic Behavior, Elsevier, vol. 141(C), pages 52-69.
    19. Kölle, Felix & Gächter, Simon & Quercia, Simone, 2014. "The ABC of Cooperation in Voluntary Contribution and Common Pool Extraction Games," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100417, Verein für Socialpolitik / German Economic Association.
    20. Korenok, Oleg & Millner, Edward L. & Razzolini, Laura, 2018. "Taking aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 397-403.
      • Korenok Oleg & Edward L. Millner & Laura Razzolini, 2017. "Taking Aversion," Working Papers 1702, VCU School of Business, Department of Economics.
    21. Casal, Sandro & Güth, Werner & Jia, Mofei & Ploner, Matteo, 2012. "Would you mind if I get more? An experimental study of the envy game," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 857-865.

    More about this item

    Keywords

    Public Provision; Procedural Fairness; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2012-015. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Markus Pasche (email available below). General contact details of provider: http://www.jenecon.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.