Experimental Economics

, Volume 21, Issue 1, pp 180–204 | Cite as

On the performance of rule-based contribution schemes under endowment heterogeneity

Original Paper
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Abstract

We experimentally test different rule-based contribution mechanisms in a repeated 4-player public goods game with endowment heterogeneity and compare them to a VCM, distinguishing between a random and an effort-based allocation of endowments. We find that endowment heterogeneities limit the efficiency gains from these rule-based contribution schemes under random allocation. Under effort-based allocations, substantial efficiency gains relative to a VCM occur. These are largely driven by significant reductions of contributions in VCM, while the rule-based mechanisms generate stable efficiency levels, even though falling short in realizing the maximal efficiency gains. Our results indicate that the procedure of endowment allocation impacts the perception of what constitutes a fair burden sharing.

Keywords

Public goods Institutions Rule-based contribution schemes Minimum contribution rules Burden sharing Cooperation Endowment heterogeneity 

JEL Classification

C72 C92 H41 

Notes

Acknowledgements

Financial support by the German Federal Ministry of Education and Research (FKZ 01UN1016A) is gratefully acknowledged. We thank the MaXLab team for their support in conducting the experiment.

Supplementary material

10683_2017_9535_MOESM1_ESM.pdf (795 kb)
Supplementary material 1 (PDF 795 kb)

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Copyright information

© Economic Science Association 2017

Authors and Affiliations

  • Martin Kesternich
    • 1
  • Andreas Lange
    • 1
    • 2
  • Bodo Sturm
    • 1
    • 3
  1. 1.Centre for European Economic Research (ZEW)MannheimGermany
  2. 2.University of HamburgHamburgGermany
  3. 3.Leipzig University of Applied SciencesLeipzigGermany

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