How to Increase and Sustain Cooperation in Public Goods : Conditional Commitments Via a Mediator

Conditional commitment devices such as price matching guarantees or legal contracts can be highly efficient and improve the outcomes for involved parties. In the context of public goods, however, empirical evidence on the cooperation-enhancing effect of conditional commitments is scarce. In this paper, we demonstrate that conditional commitments can indeed increase voluntary contributions to public goods. First, we theoretically analyze the effect of conditional commitments made through a mediator on contributions towards a public good. In this mediated game, the set of conditional commitments can be chosen such that a strong equilibrium exists, corresponding to the strong mediated equilibrium introduced in Monderer and Tennenholtz (2009). We run laboratory experiments and find, if a strong equilibrium exists, almost all interacting groups use conditional commitments and manage to coordinate on this cooperative equilibrium sustaining cooperation on a high level. When conditional commitments only allow for socially inefficient outcomes, we observe a substantial decline in their utilization, and the cooperation level drops significantly