Presentation Title

Changing Endowments in the Public Goods Game

Abstract

The public goods game examines how people make decisions about contributing money for group benefit. In the experiment, participants are given a number of tokens with a monetary value and asked to decide how many to contribute to a public fund. The public fund is multiplied and divided equally amongst participants while each participant keeps whatever remains in their private fund. This is an interesting experiment because the personal incentives do not converge with the group incentive. As a group, everyone is better off if everyone contributes their tokens. However, each participant has the ability to anonymously keep some or all of their tokens while still benefiting from the tokens contributed by their group members. This makes it difficult to get all group members to adhere to promoting group welfare.

My public goods experiment studies how changing endowments, between a low and high number of tokens, affect individual contributions levels. Participants are put into groups of five and then play two games, each consisting of twelve rounds. In some experimental sessions, groups had ten tokens in the first game and fifty tokens in the second game. In the other sessions, the order was reversed. Each round, the given number of tokens resets and participants choose how many tokens to invest in the public fund. Before the next round begins, all participants receive feedback regarding how many tokens they chose to contribute and how many tokens were contributed by the entire group. They are also told how much they earned from their share of the public fund and their private fund. I am interested in examining the effect of different endowment levels on how much people chose to invest in group welfare. This work is significant because it will examine how people’s propensity to give changes with changing asset levels.

Primary Faculty Mentor Name

Professor Sara Solnick

Status

Undergraduate

Student College

College of Arts and Sciences

Program/Major

Economics

Primary Research Category

Social Sciences

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Changing Endowments in the Public Goods Game

The public goods game examines how people make decisions about contributing money for group benefit. In the experiment, participants are given a number of tokens with a monetary value and asked to decide how many to contribute to a public fund. The public fund is multiplied and divided equally amongst participants while each participant keeps whatever remains in their private fund. This is an interesting experiment because the personal incentives do not converge with the group incentive. As a group, everyone is better off if everyone contributes their tokens. However, each participant has the ability to anonymously keep some or all of their tokens while still benefiting from the tokens contributed by their group members. This makes it difficult to get all group members to adhere to promoting group welfare.

My public goods experiment studies how changing endowments, between a low and high number of tokens, affect individual contributions levels. Participants are put into groups of five and then play two games, each consisting of twelve rounds. In some experimental sessions, groups had ten tokens in the first game and fifty tokens in the second game. In the other sessions, the order was reversed. Each round, the given number of tokens resets and participants choose how many tokens to invest in the public fund. Before the next round begins, all participants receive feedback regarding how many tokens they chose to contribute and how many tokens were contributed by the entire group. They are also told how much they earned from their share of the public fund and their private fund. I am interested in examining the effect of different endowment levels on how much people chose to invest in group welfare. This work is significant because it will examine how people’s propensity to give changes with changing asset levels.