Cooperation
Multiple-Trial Public Goods Game
In each of 10 rounds, every participant receives 100 units and decides how much to contribute to a public account. Total contributions are doubled and shared equally among all 4 participants, regardless of individual contribution. Hence, earnings per round for each participant are calculated as follows:
Earnings per round = 100 − participant’s contribution + (total contributions × 2 ÷ 4)
Total payoff is the sum across all rounds.
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You have been assigned to role A. The roles are arbitrary, they serve identification purposes only: each of the 4 participants in your group will have to make the same decisions, there is no difference between the roles.
This experiment has 10 stages.
In each stage, you will receive 100 units. Each of the other 3 participants will also receive 100 units.
Your task will be to decide how many units to transfer to the 'public account'. You can transfer any amount between 0 and 100, including 0 and 100. Each of the other 3 participants will make a decision about their transfer to the public account.
After all 4 participants in your group have reached a decision, the transfers to the public account are summed. Then, this sum is multiplied by 2. Finally, the multiplied sum in the public account is divided equally between the 4 participants in your group.
Your payoff in each stage will be:
100 − [the amount you transfer to the public account in that stage] + [sum of transfers to the public account in that stage × 2 / 4]
Your total payoff will be the sum of payoffs earned in the 10 stages.
Rational strategy: Free-riding (contribute nothing and hope everyone else invests their money)
Strong free-rider hypothesis: nobody contributes
Weak free-rider hypothesis: some people will free-ride, some won’t
Mean contribution: 76.79 units!
Contributions over time:
Why are contribution rates so high?
People reciprocate!
Participants seem to understand this dynamic and are motivated to contribute because they expect the others to do the same in the future. Notice the decline in contribution rate in the last period, when there is future interaction and hence no incentive to sustain cooperation.
Contributions made by other members in the previous period have a significant positive effect on individual contributions (p < 0.01). On average, a 1-unit increase in average contributions by other group members in the previous period yields a 0.22 increase in one’s contribution in a given period.