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Long-lasting effects of temporary incentives in public good games

Author

Listed:
  • Mathieu Lefebvre
  • Anne Stenger
Abstract
This paper addresses the question of cooperative behaviours in the long run after the removal of incentives to contribute to a public good game. This question becomes central when looking both at cost-effectiveness of public program and sustainability of the funding institutions. This paper looks at the potential permanence effect of incentives by comparing nonmonetary and monetary, positive and negative, incentives to contribute in public-good game experiments. The results show first that both monetary and nonmonetary punishments and rewards significantly increase contributions compared to the baseline but monetary sanctions lead to the highest contributions while nonmonetary sanctions lead to the lowest contributions. Second, the four types of incentives do not display long-lasting effects. In every treatment, contributions fall to the level of the initial contributions in the baseline right after the withdrawal of the incentives. Third, the results show that there are no change of preferences following the introduction of the incentives since those who free-ride and have been highly sanctioned are those who contribute the less after the removal of the sanctions. Finally, one interesting result is the same efficiency of non-monetary and monetary rewards on contribution. These findings underline the importance of looking both at the type of incentives and to better understand the changes in behavior in institutional arrangements between individuals when long-lasting cooperation is sought.

Suggested Citation

  • Mathieu Lefebvre & Anne Stenger, 2016. "Long-lasting effects of temporary incentives in public good games," Working Papers of BETA 2016-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2016-25
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    File URL: http://beta.u-strasbg.fr/WP/2016/2016-25.pdf
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    Cited by:

    1. Boun My, Kene & Ouvrard, Benjamin, 2019. "Nudge and tax in an environmental public goods experiment: Does environmental sensitivity matter?," Resource and Energy Economics, Elsevier, vol. 55(C), pages 24-48.
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    3. Benjamin Ouvrard & Anne Stenger, 2017. "Nudging with heterogeneity in terms of environmental sensitivity : a public goods experiment in networks," Working Papers of BETA 2017-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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    More about this item

    Keywords

    Experiments; Monetary incentives; Non-monetary incentives; Rewards; Punishments; Long-lasting cooperation; Voluntary Contribution Mechanism.;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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