CREED Seminars Amsterdam

Speaker(s)
Arno Riedl (Maastricht University)
Date
2009-10-01
Location
Amsterdam

Abstract: Economic and social interaction takes place between individuals with heterogeneous characteristics. We experimentally investigate the emergence and informal enforcement of different contribution norms to a public good in homogeneous groups and in groups that are heterogeneous with regard to endowments and marginal benefits from the public good. When punishment is not allowed all groups converge towards free-riding. With punishment, contributions increase and strongly differ across groups and individuals with di
erent induced characteristics. We show econometrically that these differences are not accidentally but enforced by punishment. The enforced contribution norms are related to fairness ideas of equity regarding the contributions but not regarding the earnings. Individuals with different characteristics tacitly agree on the norm to be enforced, even if this leads to large payoff differences. Our results also emphasize the role of details of the environment that may alter focal contribution norms in an important way.