Voting on Thresholds for Public Goods: Experimental Evidence

Julian Rauchdobler; Rupert Sausgruber; Jean-Robert Tyran

doi:10.1628/001522110X503370

Voting on Thresholds for Public Goods: Experimental Evidence

Julian Rauchdobler, Rupert Sausgruber, Jean-Robert Tyran

Department of Economics

12 Citations (Scopus)

Abstract

Introducing a threshold in the sense of a minimal project size transforms a public-good game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary pro-vision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter productive. This holds over a range of threshold levels and refund rates. We test whether thresholds perform better if they are endogenously chosen, i.e., whether a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects, but they are not strong enough to significantly improve the efficiency of thresholds.

Original language	English
Journal	Finanzarchiv
Volume	66
Issue number	1
Pages (from-to)	34-64
Number of pages	31
ISSN	0015-2218
DOIs	https://doi.org/10.1628/001522110X503370
Publication status	Published - Mar 2010

Keywords

Faculty of Social Sciences
provision of public goods
threshold
voting
experiments

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T1 - Voting on Thresholds for Public Goods

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AU - Rauchdobler, Julian

AU - Sausgruber, Rupert

AU - Tyran, Jean-Robert

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PY - 2010/3

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N2 - Introducing a threshold in the sense of a minimal project size transforms a public-good game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary pro-vision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter productive. This holds over a range of threshold levels and refund rates. We test whether thresholds perform better if they are endogenously chosen, i.e., whether a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects, but they are not strong enough to significantly improve the efficiency of thresholds.

AB - Introducing a threshold in the sense of a minimal project size transforms a public-good game with an inefficient equilibrium into a coordination game with a set of Pareto-superior equilibria. Thresholds may therefore improve efficiency in the voluntary pro-vision of public goods. In our one-shot experiment, we find that coordination often fails and exogenously imposed thresholds are ineffective at best and often counter productive. This holds over a range of threshold levels and refund rates. We test whether thresholds perform better if they are endogenously chosen, i.e., whether a threshold is approved in a referendum, because voting may facilitate coordination due to signaling and commitment effects. We find that voting does have signaling and commitment effects, but they are not strong enough to significantly improve the efficiency of thresholds.

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KW - experiments

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Voting on Thresholds for Public Goods: Experimental Evidence

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Keywords

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