We develop a model that accounts for the decay of the average contribution observed in experiments on voluntary contributions to a public good. The novel idea is that people's moral motivation is "weak." Their judgment about the right contribution depends on observed contributions by group...

Microfinance is generally associated with high repayment rates. However, it is not clear whether the success of microfinance results only from the use of group lending or mainly rely on peer sanctioning and long-term relationships that typically characterize microfinance contracts. In this...