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Changing Endowments in the Public Goods Game
Bowe, Madeleine
Bowe, Madeleine
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Abstract
Abstract: The public goods game examines how people make decisions about contributing money for group welfare. In the experiment, participants receive a number of tokens with a monetary value and choose how many to contribute to a public fund. The public fund tokens are increased in value and are divided equally amongst group members, and each participant individually receives the value of their own tokens that are not contributed. Therefore, participants have an incentive not to contribute to the public fund, even while they wish that other group members contribute generously. This public goods experiment studied how changing endowments, between a low and high number of tokens, affected individual contributions levels. Each group member received an endowment of 10 tokens in one game and an endowment of 50 tokens in the other game. It was hypothesized that there would be a difference in the proportion of the endowment contributed to the public fund between the high and low endowment level, with the low endowment of 10 tokens resulting in a higher proportional contribution rate than the high endowment of 50 tokens. It was found that there was a statistically significant difference in contribution rate by endowment level, with the 10 token endowment yielding higher proportional contribution rates. This experiment is significant because it examines how people’s propensity to give changes with changing asset levels.
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Date
2020-01-01