Literature

Gächter, S., Mengel, F., Tsakas, E., & Vostroknutov, A. (2017). Growth and inequality in public good provision. Journal of Public Economics, 150, 1-13. In a novel experimental design, we study public good games with dynamic interdependencies, where each agent's wealth at the end of period t serves as her endowment in t + 1. In this setting, growth and inequality arise endogenously allowing us to address new questions regarding their interplay and effect on cooperation. We find that amounts contributed are increasing over time even in the absence of punishment possibilities. Variation in wealth is substantial with the richest groups earning more than ten times what the poorest groups earn. Introducing the possibility of punishment does not increase wealth and in some cases even decreases it. In the presence of a punishment option, inequality in early periods is strongly negatively correlated with group income in later periods, highlighting negative interaction effects between endogenous inequality and punishment.

Cadsby, C. B., & Maynes, E. (1999). Voluntary provision of threshold public goods with continuous contributions: experimental evidence. Journal of Public Economics, 71(1), 53-73. This paper examines experimentally the effects of allowing individuals to contribute any desired proportion of their endowments toward a threshold public good. Permitting continuous rather than binary “all-or-nothing” contributions significantly increases contributions and facilitates provision. A money-back guarantee further encourages provision, especially when the threshold is high. A high threshold discourages provision in the absence, but not in the presence of a money-back guarantee. High rewards also significantly increase contributions and provision. Sufficiently high rewards elicit convergence of contributions to the threshold, rather than the deterioration towards free riding, often reported in previous studies.

Barrett, S. (2013). Climate treaties and approaching catastrophes. Journal of Environmental Economics and Management, 66(2), 235-250. If the threshold that triggers climate catastrophe is known with certainty, and the benefits of avoiding catastrophe are high relative to the costs, treaties can easily coordinate countries' behavior so as to avoid the threshold. Where the net benefits of avoiding catastrophe are lower, treaties typically fail to help countries cooperate to avoid catastrophe, sustaining only modest cuts in emissions. These results are unaffected by uncertainty about the impact of catastrophe. By contrast, uncertainty about the catastrophic threshold normally causes coordination to collapse. Whether the probability density function has “thin” or “fat” tails makes little difference. WP

Dannenberg, A., Löschel, A., Paolacci, G., Reif, C., & Tavoni, A. (2015). On the provision of public goods with probabilistic and ambiguous thresholds. Environmental and Resource economics, 61(3), 365-383. Many natural systems involve thresholds that, once triggered, imply irreversible damages for the users. Although the existence of such thresholds is undisputed, their location is highly uncertain. We explore experimentally how threshold uncertainty affects collective action in a series of threshold public goods games. Whereas the public good is always provided when the exact value of the threshold is known, threshold uncertainty is generally detrimental for the public good provision as contributions become more erratic. The negative effect of threshold uncertainty is particularly severe when it takes the form of ambiguity, i.e. when players are not only unaware of the value of the threshold, but also of its probability distribution. Early and credible commitment helps groups to cope with uncertainty.

Tavoni, A., Dannenberg, A., Kallis, G., & Löschel, A. (2011). Inequality, communication, and the avoidance of disastrous climate change in a public goods game. Proceedings of the National Academy of Sciences, 108(29), 11825-11829. International efforts to provide global public goods often face the challenges of coordinating national contributions and distributing costs equitably in the face of uncertainty, inequality, and free-riding incentives. In an experimental setting, we distribute endowments unequally among a group of people who can reach a fixed target sum through successive money contributions, knowing that if they fail, they will lose all their remaining money with 50% probability. In some treatments, we give players the option to communicate intended contributions. We find that inequality reduces the prospects of reaching the target but that communication increases success dramatically. Successful groups tend to eliminate inequality over the course of the game, with rich players signaling willingness to redistribute early on. Our results suggest that coordination-promoting institutions and early redistribution from richer to poorer nations are both decisive for the avoidance of global calamities, such as disruptive climate change.

Arechar, A. A., Gächter, S., & Molleman, L. (2018). Conducting interactive experiments online. Experimental economics, 21(1), 99-131. Online labor markets provide new opportunities for behavioral research, but conducting economic experiments online raises important methodological challenges. This particularly holds for interactive designs. In this paper, we provide a methodological discussion of the similarities and differences between interactive experiments conducted in the laboratory and online. To this end, we conduct a repeated public goods experiment with and without punishment using samples from the laboratory and the online platform Amazon Mechanical Turk. We chose to replicate this experiment because it is long and logistically complex. It therefore provides a good case study for discussing the methodological and practical challenges of online interactive experimentation. We find that basic behavioral patterns of cooperation and punishment in the laboratory are replicable online. The most important challenge of online interactive experiments is participant dropout. We discuss measures for reducing dropout and show that, for our case study, dropouts are exogenous to the experiment. We conclude that data quality for interactive experiments via the Internet is adequate and reliable, making online interactive experimentation a potentially valuable complement to laboratory studies.

Peer, E., Brandimarte, L., Samat, S., & Acquisti, A. (2017). Beyond the Turk: Alternative platforms for crowdsourcing behavioral research. Journal of Experimental Social Psychology, 70, 153-163. The success of Amazon Mechanical Turk (MTurk) as an online research platform has come at a price: MTurk has suffered from slowing rates of population replenishment, and growing participant non-naivety. Recently, a number of alternative platforms have emerged, offering capabilities similar to MTurk but providing access to new and more naïve populations. After surveying several options, we empirically examined two such platforms, CrowdFlower (CF) and Prolific Academic (ProA). In two studies, we found that participants on both platforms were more naïve and less dishonest compared to MTurk participants. Across the three platforms, CF provided the best response rate, but CF participants failed more attention-check questions and did not reproduce known effects replicated on ProA and MTurk. Moreover, ProA participants produced data quality that was higher than CF's and comparable to MTurk's. ProA and CF participants were also much more diverse than participants from MTurk.

Tamai, T. (2018). Dynamic provision of public goods under uncertainty. Economic Modelling, 68, 409-415. This study investigates the private provision of public goods under uncertainty using a general dynamic equilibrium model with stochastic disturbances. In particular, the model incorporates income shocks governed by a Wiener process with a mean of zero and standard deviation of unity as uncertainty. We analyze how uncertainty and population size affect the supply of public goods. Dynamic analysis shows the importance of attitude toward risk and a contrast between short-run and long-run responses to increases in uncertainty and population size. Results show that under specified conditions, escalating uncertainty reduces the long-run contributions to public goods through the stochastic accumulation of capital but it raises short-run contributions. The average contribution increases to a positive finite value by increasing the population to a certain level, but it declines toward zero if the population size is infinite. These twin results are based on the dynamic behaviors of risk-averse individuals responding to elevated risks.

Boucher, V., & Bramoullé, Y. (2010). Providing global public goods under uncertainty. Journal of Public Economics, 94(9-10), 591-603. We study how uncertainty and risk aversion affect international agreements to supply global public goods. We consider a benchmark model with homogeneous countries and linear payoffs. When countries directly contribute to a public good, uncertainty tends to lower signatories' efforts but may increase participation. Despite risk aversion, uncertainty may improve welfare. In contrast, when countries try to reduce a global public bad, uncertainty tends to increase signatories' efforts and decrease participation. In that case, an ex-ante reduction of uncertainty may have a large positive multiplier effect on welfare.

Raihani, N., & Aitken, D. (2011). Uncertainty, rationality and cooperation in the context of climate change. Climatic Change, 108(1), 47-55. Climate change represents the largest social dilemma humans have ever faced, where individual actors maximise their personal gain by emitting greenhouse gases into the atmosphere even though this is detrimental to the collective global good. Cooperation on a global scale is urgently required if we are to overcome this problem. However, this is difficult to achieve because cooperators pay the cost of reducing emissions while any benefits are shared between cooperators and free-riders alike. In a risk-free, rational world cooperative behaviour can be promoted through mechanisms that increase the benefit of cooperating relative to free-riding, such as rewards or sanctions. In reality, however, outcomes are seldom certain and humans rarely behave rationally when confronted with risky prospects. Here, we argue that effective policies to mitigate global climate change should incorporate mechanisms to foster cooperation, but also account for both uncertainty and irrational responses that may inhibit collective action.

Sonnemans, J., Schram, A., & Offerman, T. (1998). Public good provision and public bad prevention: The effect of framing. Journal of Economic Behavior & Organization, 34(1), 143-161. An experimental analysis of voluntary, binary contributions for step-level public goods/bads is presented. Alternatively, the situation is presented as the provision of a public good or the prevention of a public bad. From a strategic point of view these presentations are equivalent. In early periods of the 20 round experiments, behavior is indeed observed to be similar in both cases, but after about 5 periods differences start to occur, that grow larger. A simple learning model is developed that replicates the patterns in the experiments. Extrapolation beyond 20 periods show that the pattern observed reflects an equilibrium selection.

Fosgaard, T. R., Hansen, L. G., & Wengström, E. (2019). Cooperation, framing, and political attitudes. Journal of Economic Behavior & Organization, 158, 416-427. This paper shows that political attitudes are linked to cooperative behavior in an incentivized experiment with a large sample randomly drawn from the Danish population. However, this relationship depends on the way the experiment is framed. In the standard game in which subjects give to a public good, contributions are not linked to political attitudes. In an economically equivalent version, in which subjects take from a public good, left-wingers cooperate significantly more than subjects to the right of the political spectrum. This difference is to some extent caused by differences in beliefs and cooperation preferences but a substantial part is left unexplained, indicating that left wingers find cooperating under this institution more attractive than right wingers do.

Calzolari, G., Casari, M., & Ghidoni, R. (2018). Carbon is forever: A climate change experiment on cooperation. Journal of environmental economics and management, 92, 169-184. Greenhouse gases generate impacts that can last longer than human civilization itself. Such persistence may affect the behavioral ability to cooperate. In a laboratory experiment, we study mitigation efforts with dynamic externalities in a framework that reflects key features of climate change. In treatments with persistence, pollution cumulates and generates damages over time, while in another treatment it has only immediate effects and then disappears. We show that with pollution persistence, cooperation is initially high but then systematically deteriorates with high stocks of pollution.