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Mandatory minimum contributions, heterogeneous endowments and voluntary public-good provision. (English) Zbl 1393.91066

Summary: In a public-good experiment with heterogeneous endowments, we investigate if and how the contribution level as well as the previously observed “fair-share” rule of equal contributions relative to one’s endowment [A. Hofmeyr et al., “Income inequality, reciprocity and public good provision: an experimental analysis”, South African J. Econ. 75, No. 3, 508–520 (2007; doi:10.1111/j.1813-6982.2007.00127.x)] and [the first author and M. Schmidt, “Cooperation and punishment among heterogeneous agents”, Working paper, University of Göttingen (2014)] are influenced by minimum-contribution requirements. We consider three different schedules: FixMin, requiring the same absolute contributions, RelMin, requiring the same relative contributions, and ProgMin, requiring minimum contributions that progressively increase with the endowment. We find that minimum contributions exert norm-giving character and may lead to an increase in average group contributions. This is especially true for the progressive schedule. On the individual level, this schedule leads to higher relative contributions by the wealthier players and thus violates the “fair-share” norm. On the group level, it leads to the highest contribution level and the lowest inequality in total profits as measured by the Gini index.

MSC:

91B18 Public goods
91A90 Experimental studies

Software:

ORSEE; Z-Tree
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References:

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