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The Voluntary Contributions Mechanism with Uncertain Group Payoffs

Authors:
Publication Date:
Jan 1998
Project Programs:
Behavioral Economics

This paper reports the results of an experimental study which introduces an endogenous probability of public good provision into the voluntary contributions mechanism. Specifically, the two treatments allow for nonprovision even with positive contributions. In one treatment, the provision probability rises with increased contributions (while preserving the dominant strategy equilibrium of zero contributions). The results show that uncertainty per se lowers individual but not group contributions, lagged marginal incentives significantly predict contributions, and individuals significantly react to own-deviations from average group contributions. This has implications for work teams or professional sports teams who see increased probability of group rewards given higher effort levels.

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