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ESA World Meeting 20071 Voluntary Contributions with Imperfect Information Annamaria Fiore University of Bari M. Vittoria Levati Andrea Morone MPI of Economics,

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Presentation on theme: "ESA World Meeting 20071 Voluntary Contributions with Imperfect Information Annamaria Fiore University of Bari M. Vittoria Levati Andrea Morone MPI of Economics,"— Presentation transcript:

1 ESA World Meeting 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

2 ESA World Meeting 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

3 ESA World Meeting 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)

4 ESA World Meeting Experiment  Two treatments: PERFECT INFO IMPERFECT 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 auction 2° stage: public goods game & belief elicitation  Currency: ECU (10 ECU = 1€)  Average payoff: 11.7€ per un’ora e mezzo

5 ESA World Meeting 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).

6 ESA World Meeting 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.

7 ESA World Meeting 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)

8 ESA World Meeting Relationship risk attitude/willingness to contribute (4/4)

9 ESA World Meeting 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

10 ESA World Meeting Thanks for your attention! Annamaria Fiore University of Bari


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