McMaster Experimental Economics Laboratory R. Andrew Muller
HETEROGENEITY AND THE VOLUNTARY PROVISION
OF PUBLIC GOODS
Kenneth S. Chan, McMaster University
Stuart Mestelman, McMaster University
Rob Moir, University of New Brunswick at Saint John
R. Andrew Muller, McMaster University
July 10,1998
Abstract
We investigate the effects of heterogeneity and incomplete information
on aggregate contributions to a public good using the voluntary
contribution mechanism in a non-linear laboratory environment, using
three-person groups in a partners environment under varying conditions
of information and communication. Bergstrom, Blum and Varian predict
that increasing heterogeneity will have no effect on aggregate
contributions in a no-communication environment. Ledyard conjectures a
negative effect of heterogeneity, a positive effect of incomplete
information, and a positive interaction of heterogeneity and incomplete
information. We find that incomplete information has a small but
significant negative effect. Heterogeneity has a positive effect on
aggregate contributions, but its effects interact unexpectedly with
communication. In a no-communication environment, heterogeneity in two
dimensions (income and preferences) increases contributions
substantially while heterogeneity in a single dimension (income or
preferences) has little effect. In the communication environment we find
the reverse. We also find a positive interaction between heterogeneity
and incomplete information. Thus we reject the Bergstrom, Blume and
Varian invariance result and provide mixed evidence on Ledyard's
conjectures.
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