HETEROGENEOUS SOCIAL PREFERENCES AND THE DYNAMICS OF FREE RIDING IN PUBLIC GOOD EXPERIMENTS

We provide a direct test of the role of social preferences and beliefs in voluntary cooperation and its decline. We elicit individuals’ cooperation preference in one experiment and use them – as well as subjects’ elicited beliefs – to make predictions about contributions to a public good played repeatedly. We find substantial heterogeneity in people’s preferences. With simulation methods based on this data, we show that the decline of cooperation is driven by the fact that most people have a preference to contribute less than others. Belief formation and virtual learning do not contribute to the decline of cooperation. Universal free riding is very likely despite the fact that most people are not selfish.