Chapter 84 Voluntary Provision of Public Goods: Experimental Results with Interior Nash Equilibria

The standard public goods experiment involves linear payoffs in which the unique Nash equilibrium is at the lower boundary, i.e., full free riding. Contributions in these experiments tend to decline toward the Nash equilibrium in most treatments, but contributions persist even after as many as 60 rounds. This observation raises the question of whether the persistence of contributions is merely a boundary condition, with residual noise keeping contributions from reaching the Nash equilibrium. The designs also differ in terms of where the equilibrium is located relative to the upper and lower boundaries of the decision space. These relatively new designs are important because they can be used to evaluate the effects of treatment variables (for example, endowments, group size, and information) when the data are not being pulled toward the boundary. In addition, moving the equilibria to the center of the set of feasible contributions tends to reduce or neutralize any bias due to decision errors.