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Public Goods Experiment Variations

There are a number of variations on this experiment that you can try in class; you may come up with others that are not on this list (and your students may suggest some of their own). You should feel free to substitute any of these for the treatments suggested in the instructions, or conduct additional rounds of the experiment with any of these that you would like to try.

Exploring the effects of changes in group size

In the basic experiment, everyone in the class is in the same "group." Alternatively, you could break the class up into smaller groups and explore the effect of group size on the level of contributions. For example, in some rounds, all students sitting in a single row may be part of one group; in this case, when a red card is turned in or played, only students sitting in that row earn $1 from the contribution. The typical ("textbook") prediction is that there is less free-riding in smaller groups because there is less anonymity. However, there is a lot of experimental evidence that there is less free-riding in larger groups. Some have suggested that this is because there are larger benefits from a contribution in a larger group. In the context of this experiment, when there are 10 people in the group, a card played earns $10 ($1 for each of 10 people), but it earns $40 when there are 40 people in the group. You can bring up ideas such as this during the discussion period.

Allowing students to revise their contributions

In this version of the experiment, you can announce the number of red cards played, and then allow students to revise their choice. If you want to mimic fundraising "thermometers" you can post a goal for the number of red cards to be played, and after each announcement allow students to increase the number of red cards played. Research experiments have shown that this type of sequential decision-making can lead to higher levels of contributions than when everyone makes their decision privately, with no information about what others contribute.

Changing to a "provision point" (threshold) public good

In real-world situations, many public goods have a provision point - unless some minimum level of contributions is raised, the public good cannot be provided. For example, if only $500 is raised, a lighthouse cannot be built; and if contributions to the lighthouse increase by $5, there would not be a corresponding $5 increase in the amount of benefits made by the lighthouse. If you want to try this provision point treatment, specify some minimum level of red cards that must be played before anyone receives earnings from the group fund. For example, if there are 25 people in your class (so there are a total of 25x2 = 50 red cards), you might specify that if at least 30 red cards are played, each person in the class will receive $1 for each red card played. However, if fewer than 30 red cards are played, no one earns anything from red cards played. In this setup, you can explore the effect of "refunds" on contributions - what happens to red cards played if the threshold is not met. In one treatment, the value of the cards is lost: it is as if you make a contribution, the public good is not provided and you do not receive your contribution back. In a second treatment, the value of the cards is refunded to the person who played it: it is as if you make a contribution, but if the public good is not provided you are assured that you will receive your contribution back. Research experiments have shown that this type of refund rule has a strong, positive, effect on contributions.

 
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