Volunteering a Public Service: An Experimental Investigation

In some public goods environments it may be advantageous for heterogeneous groups to be coordinated by a single individual. This “volunteer” will bear private costs for acting as the leader while enabling each member of the group to achieve maximum potential gains. This environment is modeled as a War of Attrition game in which everyone can wait for someone else to volunteer. Since these games generally have multiple Nash equilibria but a unique subgameperfect equilibrium, we tested experimentally the predictive power of the subgame-perfection criterion. Our data contradict that subjects saw the subgame-perfect strategy combination as the obvious way to play the game. An alternative behavioral hypothesis – that subjects were unable to predict accurately how their opponents would play and tried to maximize their expected payoff – is proposed. This hypothesis fits the observed data generally well.

Attitudes, Incentives and Tax Compliance

Our study examines whether combining experimental economics and economics psychology techniques can provide a better understanding of individuals’ tax compliance decisions in the laboratory. We find that considering individuals’ attitudinal, personality and intention measures in addition to economic based variables provides a richer understanding of individuals’ actual tax compliance decisions in the laboratory in the face of monetary incentives. We also find that hypothetical and actual compliance decisions in the laboratory are significantly different from each other. Specifically, we find that actual (hypothetical) compliance decisions are significantly influenced by their moral reasoning (anti-establishment) views. Finally, we find that individuals’ actual compliance decisions in the laboratory correlate more significantly with their admission of prior evasion than either their hypothetical compliance decisions or their responses to case scenarios. The latter result, coupled with the lack of appropriate field data on tax compliance, indicates that actual compliance decisions in the laboratory in the face of monetary incentives and with the use of tax terms in the instructions may be an ideal method of obtaining data on individuals’ tax compliance.

Implications of Alternative Emission Trading Plans: Experimental Evidence

Two approaches to emissions trading are cap-and-trade, in which an aggregate cap on emissions is distributed in the form of emission allowances and baseline-and-credit, in which firms earn emission reduction credits for emissions below their baselines. Theoretical considerations suggest the long-run equilibria of the two plans will differ if baselines are proportional to output, because a variable baseline is equivalent to an output subsidy. To test this prediction we have developed a computerized environment in which subjects representing firms can adjust both their emission rates (per unit output) and capacity levels. Subjects buy or sell emission rights (allowances or credits) in a sealed bid call auction. The demand for output is simulated. All decisions are tracked through a double-entry bookkeeping system. This environment is to be used to compare short and long run responses to the alternative trading methods. Initial experiments in this environment will alternately hold emission rate and capacity choice constant. We report on six experimental sessions with variable emissions rates but fixed capacity and two pilot sessions with variable capacity but fixed emission rates.

Heterogeneity, Communication, Coordination and Voluntary Provision of a Public Good

The results of twenty-four laboratory sessions are evaluated with respect to the role of alternative definitions of equity when communication is introduced into an environment in which voluntary contributions determine the level of public good provision to small groups of individuals. Individuals experience both non-communication and communication treatments. Additional treatments include the extent to which subjects have information about others’ payoffs from (preferences for) the consumption of public goods and about others’ incomes and payoff functions (preferences). With communication, participants in incomplete information environments are less able to coordinate their contributions while those in complete information environments succeed more often. Under complex heterogeneity payoff distributions widen with the introduction of communication. The data do not support the emergence of a particular pattern of coordination across all treatments.

Crowding Out Voluntary Contributions to Public Goods

We test the null hypothesis that involuntary transfers for the provision of a public good will completely crowd out voluntary transfers against the warm-glow hypothesis that crowding-out will be incomplete because individuals care about giving. Our design differs from the related design used by Andreoni in considering two levels of the involuntary transfer and a wider range of contribution possibilities, and in mixing groups every period instead of every four periods. We analyse the data with careful attention to boundary effects. We retain the null hypothesis of complete crowding-out in two of three pairwise comparisions, but reject it in favour of incomplete crowding-out in the comparison most closely akin to Andreoni's design. Thus we confirm the existence of incomplete crowding-out in some environments, but suggest that the warm-glow hypothesis is inadequate in explaining it.

Crowding Out Voluntary Contributions to Public Goods

We test the null hypothesis that involuntary transfers for the provision of a public good will completely crowd out voluntary transfers against the warm-glow hypothesis that crowding-out will be incomplete because individuals care about giving. Our design differs from the related design used by Andreoni in considering two levels of the involuntary transfer and a wider range of contribution possibilities, and in mixing groups every period instead of every four periods. We analyse the data with careful attention to boundary effects. We retain the null hypothesis of complete crowding-out in two of three pairwise comparisions, but reject it in favour of incomplete crowding-out in the comparison most closely akin to Andreoni’s design. Thus we confirm the existence of incomplete crowding-out in some environments, but suggest that the warm-glow hypothesis is inadequate in explaining it.

Heterogeneity and the Voluntary Provision of Public Goods

We investigate the effects of heterogeneity, incomplete information and communication on aggregate contributions to a public good using the voluntary contribution mechanism in a nonlinear laboratory environment. One-dimensional heterogeneity (heterogeneity in income or preferences) and two-dimensional heterogeneity (heterogeneity in income and preferences) both increase voluntary contributions. The effect is greatest when information is incomplete in the sense that subjects do not know each other’s payoffs. Incomplete information also reduces contributions in the homogeneous case. Communication reverses the relative importance of oneand two-dimensional heterogeneity in promoting cooperation.

The Effects of Communication on the Partnership Solution to the Commons

© 2017, Springer Science+Business Media Dordrecht. Organizing individual appropriators into output sharing groups has been found to effectively solve the tragedy of the commons problem. We experimentally investigate the robustness of this solution by introducing different channels of communication that naturally arise from group competitions. In the absence of communication, we confirm that output sharing can introduce sufficient free riding to offset over-harvesting and results in full efficiency. Allowing local communication within output-sharing groups substantially decreases this efficiency enhancement because it reduces free riding and boosts between-group competition. Yet the efficiency level is still significantly higher than that achieved when global communication is allowed among all appropriators in a conventional common pool resource without output sharing. The efficiency-reducing effect of local communication is mitigated when random partners instead of fixed partners are sharing output over time, and is nearly eliminated when random partners are formed with users who belong to different communication groups