In this paper, we compare the cause and effect of immaterial rewards and sanctions on cooperation in a voluntary contributions experiment. We find that both rewards and sanctions increase contributions only when subjects interact repeatedly, though rewards seem to be more effective than sanctions. Moreover, in contrast to sanctions, rewards do have an impact on future contributions. Although th...

This paper examines the equilibrium relationship between politics and the economy. I consider a repeated-election model with policy and office motivated politicians. The incumbent politician chooses a tax rate and oversees the activities of the private and public sectors. Politicians differ in their ability to increase the productivity of the private sector, and in their ability to transform ta...

It is well known that ex post e¢ cient mechanisms for the provision of indivisible public goods are not interim individually rational. However, the corresponding literature assumes that agents who veto a mechanism can enforce a situation in which the public good is never provided. This paper instead considers majority voting with uniform cost sharing as the relevant status quo. E¢ cient mechani...

In an environment with strategic interaction, multiple equilibria yields a coordination problem and strategic uncertainty, even in the idealized setting of complete information. The resulting disequilibrium of beliefs leads to coordination failure, as demonstrated by many experiments. This paper examines two such coordination problems: the threshold game with a unitary public good and the marke...

Ambiguity on Audits and Cooperation in a Public Goods Game We investigate the impact of various audit schemes on the future provision of public goods, when contributing less than the average of the group is sanctioned exogenously and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being audited, both before and after audits are defi...

Punishing Free-Riders: How Group Size Affects Mutual Monitoring and the Provision of Public Goods Because costly punishment is not credible, subgame perfection suggests that punishment will not deter free riding, regardless of the size or structure of groups. However, experiments show that people will punish free riders, even at considerable cost. To examine the implications of agents who punis...

We develop and test a model of social comparison in which individuals gain status through pro-social behavior (competitive altruism) and in which they endogenously choose the reference group and associated reference standard involved in signaling status (reference group selection). In our framework of private provision of environmental public goods, the optimal reference standard involves a bal...

Everyone is a Winner: Promoting Cooperation through All-Can-Win Intergroup Competition We test if cooperation is promoted by rank-order competition between groups in which all groups can be ranked first, i.e. when everyone can be a winner. This type of rank-order competition has the advantage that it can eliminate the negative externality a group’s performance imposes on other groups. However, ...

Monetary incentives are often considered as a way to foster contributions to public goods in society and firms. This paper investigates experimentally the effect of monetary incentives in the presence of a norm enforcement mechanism. Norm enforcement through peer punishment has been shown to be effective in raising contributions by itself. We test whether and how monetary incentives interact wi...

Humans display levels of cooperative behavior that contradict the predictions of theoretical models of rational self-interested individuals. We propose a novel technique to discriminate among other-regarding behavior, self-interested strategic play, and decision errors in laboratory experiments. We introduce “virtual players” in two public goods experiments to remove the concerns of human subje...