Public Goods, Social Norms and Naive Beliefs

An individual’s contribution to a public good may be seen by others as a signal of attributes such as generosity or wealth. An individual may, therefore, choose their contribution so as to send an appropriate signal to others. In this paper we question how the inferences made by others will influence the amount contributed to the public good. Evidence suggests that individuals are naive and biased towards taking things at "face value". We contrast, therefore, contributions made to a public good if others are expected to make rational inferences versus contributions if others are expected to make naive inferences.