2 - LEC 3 - Public goods as cooperation problems Flashcards
examples of cooperation problems
- Teamwork
- Public goods
- Group incentive schemes
- Collective action
- Common pool resources
- Charities
how does the pure public goods model work
what an example of the pure public goods model
What are possible explanations for decay of contributions?
• Errors and learning
– Players make errors but gradually learn the dominant
strategy
• Strategic reasons, reputation effects
– Players contribute in early rounds in hope of boosting
future contributions of other players
• Conditional cooperation, reciprocity (i.e., social preferences see previous lectures)
– Players are willing to cooperate if others do
– Over time, players learn the behaviour of others and adapt their own contributions
– Free-riders in the group will lead to more free-riding…
describe the Andreoni (1988, J Public Econ) ‘Why free ride?: Strategies and learning in public goods experiments’
Aim: Distinguish between strategy and learning
• Repeated PG game with two treatments:
– Partners (N=30): same group throughout the game
– Strangers (N=40): randomly re-matched after each round (‘repeated one-shot’)
• Strategy hypothesis
– Partners will contribute more, early in the game and then
free ride in the final rounds
– Strangers have no incentive to build up a reputation, so contributions will be lower
• Learning hypothesis
– If learning is responsible for the decay, then both partners and strangers should be unaffected by the restart
- Partners can learn and play strategically
- Strangers can learn (no strategic play possible)
- Positive difference (Partners – Strangers) can be attributed to strategic play
what is The public goods game useful for
useful tool for examining voluntary cooperation
—– Experimental evidence shows more cooperation than predicted by standard economic theory
• But there is significant free riding, particularly in repeated games
