Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324990 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11999
Publisher: 
CESifo GmbH, Munich
Abstract: 
In social dilemmas, cooperation failures often arise due to the absence of mechanisms that prevent free-riding and enhance cooperation. Given the critical role these mechanisms play in sustaining cooperation, why are they so frequently missing? To explore this, we conducted an online experiment testing whether individuals choose to implement such cooperation-inducing mechanisms and why they might refrain from doing so. Participants were introduced to the rules of two public goods games, one of which includes a cooperation-inducing mechanism, while the other does not. Regarding the likelihood of successful cooperation, we found that participants were overly optimistic in the absence of the mechanism and overly pessimistic in its presence. As a result, a majority of subjects preferred the game without the cooperation-inducing mechanism. However, when we corrected participants' beliefs about the actual payoffs obtained in the two games, a majority shifted their preference toward the game with the cooperation-inducing mechanisms in place.
Subjects: 
free riding
equilibrium effects
misspecified beliefs
spectator design
JEL: 
D90
D01
C91
Document Type: 
Working Paper
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