Alternative Rebate Rules in Enhancing Large-Group Threshold Public Goods Provision : Experimental Investigation Via Belief and Conditional Strategy

Using rebate rules to facilitate public goods provision has become a common practice for many social, economic, and environmental issues. This paper explores the effect of both non-endogenous and endogenous rebate rules on threshold-public goods provision in large groups. We follow the experimental design and protocol in Spencer et al. (2009) and Rondeau et al. (1999) except that we (1) propose two endogenous rebate rules – the uniform price cap (UPC) and the uniform price auction (UPA) – in addition to their exogenous rebate rules; (2) elicit subjects’ beliefs over others’ average contributions and cost of the public good with incentives provided; and (3) elicit conditional contribution strategies with strategy method in a questionnaire. Results show that large groups can perform better than small groups if endogenous rebate rules are implemented. UPC outperforms all other rebate rules for large groups. Belief and conditional strategy data further indicate that belief over others’ contributions and marginal penalty explain a large portion of the differences among different rebate rules. Our findings provide belief-based evidence that is lacking in the literature studying threshold public goods games with rebates, suggesting potential benefits for employing endogenous rebate rules to foster public goods provision