How Fairness Can Affect Voluntary Contributions to Public Goods

Stephane Aymard

Public Goods
Welfare Economics: Allocative Efficiency, Externalities, Fairness, Altruism

Non-computerized experiment

Contributions to public goods have been studied experimentally by economists and sociologists for a long time. The main result is that subjects free ride, but not as much as game theory predicts. The standard game is as follows. Each member of a group of n players receives an endowment zi. Each player has to choose how much to invest in a public good. The experimenter collects the contributions, multiplies the total by some amount (a) and divides equally the product among the players. The game-theoretic prediction is that no one contributes as long as a/n<1. Experimental results showed that this prediction is not verified: subjects contribute around 40% of their endowments (see Ledyard, 1995, for a survey). The main studies focused on the rate of return of the public good, the number of players, the introduction of thresholds, institutional rules, etc. Some of them also examined subjects' preferences: comparative studies have been done on gender or education (for instance, Brown-Kruse and Hummels, 1992). In this paper, we propose to test the influence of fairness on subjects' decisions. Previous studies used questionnaires to discriminate among participants those who have stronger senses of fairness. Here, we study it directly in games with unfair redistribution, i.e., with payoffs and endowments heterogeneity. Our experiment, easy to reproduce in the classroom, shows that contribution rates differ largely and proves that fairness play a role in subjects' decisions to contribute.