We conduct an experiment on the impact of feedback in the Trust Game. In our treatment group, the Trustee has the opportunity to give feedback to the Investor (free in choice of wording and contents). The feedback option is found to reduce the share of Investors who sent no resources to the...

Economists should be interested in understanding the factors behind the fairness assessment of inequality since this codetermines individuals' willingness to cooperate and to exert positive reciprocity as a tax payer and citizen. So far, this topic has been largely neglected in the economic...

We investigate the motives of pro-social behavior in collective decisions in an economic experiment. It compares individual behavior in private and collective decisions in a unified experimental setup. Subjects are given an individual endowment and have to decide how much of it to donate to...

This paper analyses the impact of vertical grants on local public sector efficiency. First, we develop a theoretical model in which the bureaucrat sets the tax price while voters choose the quantity of public services. In this model, grants reduce efficiency if voters do not misinterpret the...

There are two well-established empirical regularities about voters. First, they entertain systematically biased beliefs about how public policies affect economic outcomes. Second, voters vote retrospectively: they punish the incumbent for poor and reward him for good macroeconomic performance....

Performance budgeting schemes in the public sector have to operate with imperfect performance measures. We argue that these imperfections lead to wasteful fund-seeking (window dressing and lobbying) by the administrative units that produce public services. We develop a game-theoretical model to...

We present the first economic experiment on bandwagon behavior in voting. Subjects are given an individual endowment and vote by majority rule to either keep the endowment for private use or to donate it to a non-governmental organization. In our experiment, participants are divided at random in...

Private and collective enterprises are expected to increase overall efficiency in transitional China, partly because they are more efficient than state owned enterprises. More importantly, this paper argues, they induce efficiency gains in state owned enterprises and the economy as a whole....

In an experiment designed to test for expressive voting, Tyran (JPubEc 2004) found a strong positive correlation between the participants' approval to a proposal to donate money for charity and their expected approval rate for fellow voters. This phenomenon can be due to a bandwagon effect or a...

The paper addresses the welfare implications of conditional grants if government failure leads to inefficiencies in the production of regional public goods and services. Conditional grants may improve welfare by setting incentives for regions to improve efficiency. At the same time, resources...