Working Paper, Brown University, Department of Economics 2004-01
Mounting evidence suggests that the outcomes of laboratory public goods games, and collective action in firms, communities, and polities, reflect the presence in most groups of individuals having differing preferences and beliefs. We designed a public goods experiment with targeted punishment opportunities to (a) confirm subject heterogeneity, (b) test the stability of subjects’ types and (c) test the proposition that differences in group outcomes can be predicted with knowledge of the types of individuals who compose those groups. We demonstrate that differences in the inclination to cooperate have considerable persistence, that differences in levels of cooperation after many periods of repeated interaction can be significantly predicted by differences in inclination to cooperate which are manifested in the initial periods, and that significantly greater social efficiency can be achieved by grouping less cooperative subjects with those inclined to punish free riding while excluding those prone to perverse retaliation against cooperators.
public goods voluntary contribution mechanism heterogeneous preferences group formation