Participation costs for responders can reduce rejection rates in ultimatum bargaining

This paper reports data from an ultimatum mini-game in which responders first had to choose whether or not to participate. Participation was costly, but the participation cost was smaller than the minimum payoff that a responder could guarantee himself in the ultimatum game. Compared to a standard treatment, we find that the rejection rate of unfavorable offers is significantly reduced when participation is costly. A possible explanation based on cognitive dissonance is offered

How burning money requires a lot of rationality to be effective

This paper proposes an extension of the valuation equilibrium concept (Jehiel and Samet, 2007), which partly endogenises the underlying grouping of actions. The effect on equilibrium predictions is illustrated in a burning money game. </p

On the Private Provision of Intertemporal Public Goods with Stock Effects

The provision of public goods is often hindered by a lack of powerful institutions that can sanction free riders or otherwise enforce private contributions to the public good. The simple deposit based solution introduced by Gerber and Wichardt (J Public Econ 93:429-439, 2009) solves this problem, but may require prohibitively large deposits, in particular in the context of intertemporal public goods. In this paper, we propose a modification of the deposit solution that relies only on comparably small deposits. The proposed modification improves the applicability of the procedure, most notably as it also allows to reduce deposits in static public goods problem by transforming them into dynamic ones with small per period contributions

Minimum participation rules for the provision of public goods

This paper considers the endogenous formation of an institution to provide a public good. If the institution governs only its members, players have an incentive to free ride on the institution formation of others and the social dilemma is simply shifted to a higher level. Addressing this second-order social dilemma, we study the effectiveness of three different minimum participation requirements: (1) full participation/unanimity rule; (2) partial participation; (3) unanimity first and in case of failure partial participation. While unanimity is most effective once established, one might suspect that a weaker minimum participation rule is preferable in practice as it might facilitate the formation of the institution. The data of our laboratory experiment do not support this latter view, though. In fact, weakening the participation requirement does not increase the number of implemented institutions. Thus, we conclude that the most effective participation requirement is the unanimity rule which leaves no room for free riding on either level of the social dilemma. (C) 2013 Elsevier B.V. All rights reserved