Cooperation and strategic complementarity: an experiment with two voluntary contribution mechanism games with interior equilibria (Q1630455)

Summary: In public goods game experiments, designs implementing nonlinearities in the production are less common than the standard linear setting, especially so under the assumption that the private goods production and public goods aggregation function are both nonlinear. We study a voluntary contribution game (VCM) in which returns from the private project have diminishing marginal benefits and the contributions to the joint project exhibit pairwise strategic complementarities. As a control, we use a public goods game with an identical private production technology, but with the standard linear public goods aggregation. In addition to the aggregation technology, we manipulate the group size variable: In both treatments, the subjects will first play a VCM game in groups of five for 20 rounds, after which the group size is reduced to two, and the game is played for another 20 rounds. A significant over-contribution is observed in both settings when the group size is five. The rate of over-contribution is much higher under the complementary technology, but as predicted by theory, the contributions drop drastically when the group size is reduced from \(n=5\) to \(n=2\) within this treatment. Our experiment also provides empirical evidence that the so-called group size effect is present in both treatments, but it is much weaker under the standard aggregation technology.