Is a public goods experiment like Fight Club? Strategic interaction and the crowding-out effect on altruism

Contributions to the public goods stem from selfish motivations (strategic cooperation) as well as other-regarding considerations, either related to opponents’ behaviour (reciprocity), or unconditional. In this paper we provide strong experimental evidence that these components are not additive, and in particular that unconditional altruism is crowded out when strategic interaction driven by extrinsic motivations plays a role. We find that neutralizing strategic interaction in a repeated dictator games causes contributions to be not only significantly higher than in comparable standard linear public goods games, but also not characterized by the usual decreasing pattern. In contrast, when strategic interaction matters, participants behave less altruistically since the beginning of the game. Some of them start contributing a positive amount with the only purpose of increasing their individual payoffs, but such attempts are systematically frustrated causing the well-known decreasing pattern. We believe that guilt aversion is the most likely explanation of the different behaviour, since in the repeated dictator games the recipients’ payoffs only depend on donors’ generosity, while in the public goods game all the players are characterized by equal opportunities.