Academic journal article Economic Inquiry

Competition and Cooperation in a Public Goods Game: A Field Experiment

Academic journal article Economic Inquiry

Competition and Cooperation in a Public Goods Game: A Field Experiment

Article excerpt

I. INTRODUCTION

People's contributions to public goods are affected by the contributions of others. For example, it has been demonstrated that individuals choose to match the past contribution decisions and amounts of other contributors to the same public good, a result commonly attributed to prosocial cooperative behavior (Fischbacher, Gachter, and Fehr 2001; Frey and Meier 2004; Shang and Croson 2009). It has also been suggested that competitive motivations across groups can lead to increased public good contributions within groups (Bornstein and Ben-Yossef 1994; Bornstein, Gneezy, and Nagel 2002; Erev, Bornstein, and Galili 1993). In this article, we provide a test of this competition hypothesis using a natural field experiment, and we directly compare the effects of competitive and cooperative donating environments. Specifically, we solicited donors engaged in a competitive public good game and presented them with information about the contributions of members of their own group, contributions of members of the competing group, or no information about the contribution of others (the control group). Our results suggest that competitive motives are potentially more useful in driving higher contribution rates and total contributions.

The field experiment involved sending one of three types of solicitation postcards to 10,000 potential donors to a Democratic candidate's 2008 campaign for the U.S. House of Representatives. Two of the postcard designs contained a reference to average past contribution amounts of a reference group: either Democrats (the cooperative treatment) or Republicans (the competitive treatment). Specifically, the reference in the postcard for the competitive treatment reads "Small Republican contributions have been averaging $28" while the reference in the postcard for the cooperative treatment reads "Small Democratic contributions have been averaging $28." (1) As both treatments reference the same monetary amount, we can independently identify the differential effect of the referenced group. The third postcard type (the control treatment) neither referenced past contribution amounts, nor mentioned a reference group. As such, we can also identify the joint effect of referencing a group (one's own group or the competing group) and a past reference amount.

The political contribution environment we study can be seen as a close analog of the intergroup public good (IPG) game suggested by Rapoport and Bornstein (1987), which is commonly used in laboratory research on competitive effects in public good games. In the IPG, individuals in two groups choose contribution amounts and members of the group with the largest collective amount of contributions are given a larger reward than members of the other party. We extend this model to more closely match the political contribution environment, in which contributions lead to a higher chance of a party winning the race, giving a larger benefit to donors to that party. We then theoretically analyze the effect of our three treatments in this environment on an agent with Charness-Rabin (2002) social preferences. The model predicts that the cooperative treatment will lead to either higher contributions or contributions closer to the reference point, depending on the agent's social preferences. The model also predicts that the competitive treatment will lead to higher contributions if agents feel a strong sense of negative reciprocity toward members of the other party (which seems plausible in the 2008 political environment). (2)

In the field experiment, we find that the contribution rates in the competitive, cooperative, and control treatments were 1.45%, 1.08%, and 0.78%, respectively. Furthermore, with the exception of one larger contribution, the distribution of contributions in the competitive treatment first order stochastically dominates that of the cooperative treatment. The cooperative treatment induced more contributions concentrated near the common reference point ($28), while the competitive treatment induced more contributions at nearly twice the level of this reference point (about $50). …

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