ESA World Meeting 2007 1

Voluntary Contributions with Imperfect Information

Annamaria Fiore

University of Bari

M. Vittoria Levati Andrea Morone

MPI of Economics, Jena University of Bari

University of Bari

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Motivation

to examine the effect of incomplete information on contribution levels

two-person linear voluntary contribution mechanism with stochastic marginal benefits from the public good

most previous experimental studies performed in an extremely rich informational environment

Yet, in real life, one hardly knows in advance the marginal benefit she can derive from a public good she is asked to finance

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Hipothesis

A severe lack of information may lower individuals’ willingness to contribute (Bagnoli and Lipman, 1989, “complete information […] is a very strong assumption […]. Incomplete information may lead to underprovision, p. 585)

to establish a relationship between attitude to risk and willingness to contribute (Ledyard, 1995, p. 143)

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Experiment Two treatments: PERFECT INFOIMPERFECT INFO

Between design

32 participants in each treatment

Computerized (Ztree, Fischbacher, 1999)

Subject pool: students in Economics – recruitment: ORSEE software (Greiner, 2004)

Lab at MPI, Jena, Germany, on February 2005

2 stages:1° stage: Vickrey auction2° stage: public goods game & belief elicitation

Currency: ECU (10 ECU = 1€)

Average payoff: 11.7€ per un’ora e mezzo

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Results (1/4)

The difference in contribution decisions between treatments is remarkable and significant (two-sided Wilcoxon rank-sum tests - based on averages over players for each pair as independent unit of observation – p<0.001 in each of the first nine periods; p=.92 in period 10; N = 16; p=.001; N = 16 averaging over all periods).

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Results (2/4) 1° period: independent obs.

individual contributions and individual beliefs: highly significantly correlated (Spearman rank correlation coefficients are 0.83 in PERFECT INFO, and 0.80 in IMPERFECT INFO in each treatment)

a statistically significant difference in first-period beliefs between treatments (one-tailed Wilcoxon rank-sum test: p-value = .004, N = 32). No participant is expected to free-ride under perfect information, whereas 6 subjects hold free-riding expectations under imperfect information.

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Results (3/4) beliefs in all periods following the first: endogenous

correlation analysis between beliefs in period t about the partner’s contribution in t and the actual contribution of the partner in period (Spearman rank correlation coefficients: PERFECT INFO = .92 IMPERFECT INFO = .98, p-value < .001, N = 16)

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Relationship risk attitude/willingness to

contribute (4/4)

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Conclusion Evidence for the impact of imperfect information on voluntary contribution behavior in linear public goods games, and for the relationship between risk attitudes and willingness to cooperate

Linear voluntary contribution mechanism: efficient?

Political economy perspective: individuals provided with a good knowledge about their marginal benefits if requested to contribute

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Thanks for your attention!

Annamaria Fiore

University of Bari

afiore@dse.uniba.it