Abstract
We explore the effect of fixed versus dynamic group membership on public good provision. In a novel experimental design, we modify the traditional voluntary contribution mechanism (VCM) by periodically replacing old members of a group with new members over time. Under this dynamic, overlapping generations matching protocol we find that average contributions experience significantly less decay over time relative to a traditional VCM environment with fixed group membership and a common termination date. These findings suggest that the traditional pattern of contribution and decay seen in many public goods experiments may not accurately reflect behavior in groups with changing membership, as is the case in many real-world environments.
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Notes
The reason for the paucity of overlapping generation experiments is likely owing to the inconvenience of having subjects enter or exit the laboratory at different times. We address this issue in our experimental design.
Indeed, as fundraising expert Burnett (2002), p. 155 writes: “Every fundraising organization needs to be recruiting new supporters constantly, if not for reasons of growth then to replace those lost through natural (or unnatural) wastage”.
They may also be reassigned between groups [as in endogenous group formation designs or real stranger protocol of Sonnemans et al. (1999)].
Another experimenter remained in the room with the remaining subjects and enforced a rule of no communication.
An alternative motivation comes from Malmendier and Nagel (2014) who report that individuals place higher weight on realizations of macroeconomic data (e.g., inflation) experienced during their life-times as compared with the available historical data prior to their birth.
Once subjects had completed their participation in a dynamic treatment session they were immediately paid in a separate room adjacent to the laboratory and were excused, i.e., they did not have to wait around for the session to end to receive their payment.
For this reason, it would be difficult to compare behavior in our dynamic treatment with behavior in a fixed match environment lasting 36 periods, as the latter would involve play of the public good game by subjects who lived 3 times longer than any subject in our dynamic treatment.
The logic of this truncation may be better understood by reference to Fig. 1.
As explained below, the dummy variable is constructed in this manner as turnover is intended to detect restart effects among existing subjects.
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We thank the associate editor and two referees for helpful comments and suggestions. We also thank the University of Pittsburgh Dietrich School of Arts and Sciences for funding this research.
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Duffy, J., Lafky, J. Birth, death and public good provision. Exp Econ 19, 317–341 (2016). https://doi.org/10.1007/s10683-015-9439-y
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DOI: https://doi.org/10.1007/s10683-015-9439-y