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The Impact of Dynamic Feedback and Personal Budgets on Arousal and Funding Behaviour in Participatory Budgeting

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Abstract

Public institutions as well as corporations seek to engage their constituents and employees in participatory processes to enhance engagement in decision-making. This paper proposes a group decision method of fusing crowdfunding and participatory budget allocation. In this approach, a central institution lets their members decide over budget allocation by endowing members with individual budgets. Participants are free to allocate their budgets to projects. A project is realized if its respective cost threshold is surpassed. We evaluate different design parameters of such mechanisms for group decisions and, based on this, the allocation of institutional budgets within a controlled laboratory experiment. The first design parameter is feedback on funding status, which can either be static (a one-shot decision, simultaneous funding) or dynamic (sequential decisions, repeated funding with continuous feedback). The second variable refers to the fraction of budget that may be kept privately by individuals and is not forfeit if not assigned to projects. Building on threshold public goods literature, we investigate how these parameters affect participants’ investment behaviour, their excitement, and overall welfare. We find that mechanisms including feedback net higher welfare gains as well as higher levels of arousal. Higher personal budget shares drive excitement but lead to lower welfare gains.

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Authors and Affiliations

  1. Karlsruhe Institute of Technology, Fritz-Erler-Straße 23, 76133, Karlsruhe, Germany

    Claudia Niemeyer & Christof Weinhardt

  2. Technical University of Berlin, Ernst-Reuter-Platz 7, 10587, Berlin, Germany

    Timm Teubner

  3. University of Nebraska at Omaha, 1110 S 67th St, PKI 285C, Omaha, NE, 68182, USA

    Margeret Hall

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  1. Claudia Niemeyer
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  2. Timm Teubner
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  3. Margeret Hall
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  4. Christof Weinhardt
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Correspondence to Timm Teubner.

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Niemeyer, C., Teubner, T., Hall, M. et al. The Impact of Dynamic Feedback and Personal Budgets on Arousal and Funding Behaviour in Participatory Budgeting. Group Decis Negot 27, 611–636 (2018). https://doi.org/10.1007/s10726-018-9578-6

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