An Experimental Investigation of Delegation, Voting and the Provision of Public Goods

We explore a possible solution to the free-rider problem involving the delegation of individual contribution decisions to an elected agent. Our first experiment demonstrates that when delegation is an exogenously imposed institution, it results in the efficient full contribution outcome, primarily because groups elect pro-social agents to make the allocation decisions and replace those who do not implement full contribution outcomes. However, we also observe outcomes in which a minimum winning coalition exploits the contributions of the remaining players. Our second experiment demonstrates that when delegation is endogenous, individuals voluntarily cede authority to an elected agent, but only when pre-play communication is permitted. Our combined results demonstrate that delegation can help groups overcome the free-rider problem, even though free-riding incentives still exist under the mechanism.  Thanks to participants at the 2008 Midwest Political Science Association conference, the 2008 North American Economic Science Association Meetings, the 2008 American Political Science Association conference, 2010 NYU Conference on Experimental Political Science, and to seminar participants at several locations for valuable comments and suggestions. Jonathan Woon thanks the Berkman Faculty Development Fund at Carnegie Mellon University for financial support of the project. We are also thankful to the Pittsburgh Experimental Economics Laboratory (PEEL) for access to resources. 2 Social scientists have long recognized individuals‘ strong incentives to ―free ride‖ from the contributions of others when public goods are provided through decentralized, voluntary institutions (Lindahl 1919, Samuelson 1954, Olson 1965, Hardin 1968, Dawes 1980). An implication of such individual incentives is that society will tend to under-produce public goods and sometimes even fail to produce them at all. One justification for government is that it can solve the free-rider problem by using its coercive power—as in Hobbes‘ Leviathan—whereby citizens cede or delegate decision-making to a centralized authority. Indeed, governments provide a variety of public goods ranging from security (national defense, anti-terrorism, police services), to public spaces (libraries and parks), to infrastructure (roads and highways). However, in contrast to Hobbes‘ ideal vision of an absolute sovereign, central decision-makers in modern democratic governments only wield their power temporarily and subject to popular approval, since regular elections give citizens the opportunity to select new leaders. We explore the extent to which centralized, delegated decision making can solve the freerider problem, when the central authority is subject to repeated elections. We conduct two laboratory experiments that investigate the effects of delegation and voting on the provision of public goods. Our first experiment contrasts situations in which individuals independently decide how much to contribute to the public good (i.e., the canonical voluntary contribution mechanism) with a delegation mechanism in which individuals instead decide who should make allocation decisions for them. Thus, the group delegates authority by electing one of its members to determine the contributions of each member to a public good, including the possibility of asymmetric allocations. This process is repeated in every period.