ICES Experimental Economics Brown Bag Lecture

Coordination via Assurance: A Lab-in-the-Field Threshold Public Goods Experiment

Thursday, October 26, 2023 12:00 PM to 1:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), Room 5075

ICES Experimental Economics Brown Bag Lecture

The Interdisciplinary Center for Economic Science (ICES) presents an ICES Brown Bag Lecture featuring:

Shuwen Li

Antai College of Economics and Management, Shanghai Jiao Tong University

Coordination via Assurance: A Lab-in-the-Field Threshold Public Goods Experiment

 

 

 

Abstract

We investigate two crowdfunding mechanisms, the refund bonus mechanism (RBM, Zubrickas, 2014) and the assurance payment mechanism (APM, Li et al., 2014), for the voluntary provision of threshold public goods in rural China. Both mechanisms offer assurance to would-be contributors if the provision fails: RBM offers bonuses proportional to contributions, while APM pays a fixed assurance payment once a minimum contribution level is reached. We design an experiment varying bonus levels to compare the two mechanisms among farmers, college and high school students in large groups of size 50. We find that APM induces more individual contributions than RBM in most cases, where the assurance payment (AP) acts as a coordination focal point. Farmers are the most responsive heuristically to AP, followed by college and then high school students. RBM is more effective in terms of distributive efficiency by facilitating contributions proportional to induced values. Our results highlight the importance of salient coordination properties in crowdfunding mechanisms to provide public goods, and suggest that optimal mechanism design should depend on specific policy objectives.

 

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