'The carrot or the stick?' Achieving the voluntary provision of a public good with a reward or sanction mechanism

This study investigates the effect of compliance mechanisms on contributions to a public good fund in an experimental context. Thirty-six participants, matched by gender and trust level into nine groups of four participants, were recruited from a first year economics course. They participated in an experiment in which they were asked to contribute funds to public and private accounts. In addition, they were asked in the experimental conditions to contribute to a reward fund, a sanction fund, or both. The results of the experiment show that, while both sanctioning and rewarding mechanisms are equally effective at inducing participants to contribute to a public good fund, the presence of a reward mechanism is critical in raising participant earnings. No effect of trust was found, but evidence of differences between male and female behaviour over trials was found. The results of the study emphasise the importance of taking account of agent heterogeneity and personality factors when examining the public good problem, as well as the need for good experimental design. Future research is needed to examine the effect of reward or sanctioning level on contributions and profit. Individual and social factors also warrant further attention.UnpublishedAndreoni, J. (1995). Co-operation in Public Goods Experiments: Kindness or Confusion? The American Economic Review, 85(4), 891-914. Bandura, A. (1986). Social Foundations of Thought and Action: A Social Cognitive Theory. Englewood Cliffs: Prentice-Hall Inc. Bolton, G.E. (1998). Bargaining and dilemma Games: From Laboratory Data towards Theoretical Synthesis. Experimental Economics, 1, 257-281. Callander, A. (1998). Understanding the Economic Environment. Wellington: Butterworths of New Zealand Ltd. Carlson, N.R. and Buskist, W. (1997). Psychology: The Science of Behaviour (2nd ed.). Boston: Allyn and Bacon. Cason, T.N., Saijo, T. and Yamato, T. (2002). Voluntary Participation and Spite in Public Good Provision Experiments: An International Comparison. Experimental Economics, 5, 133-153. Clark, J. (1999). Recognising Large Donations to Public Goods: An experimental test. University of Canterbury Discussion Paper, No. 9907. Croson, R.T. and Marks, M.B. (2000). Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis. Experimental Economics, 2, 239-259. De Cremer, D., Snyder, M. and DeWitte, S. (2001). 'The less I trust, the less I contribute (or not)?' The effects of trust, accountability and self-monitoring in social dilemmas. European Journal of Social Psychology, 31, 93-107. Fehr, E. and Gachter, S. (2000). Co-operation and Punishment in Public Goods Experiments. The American Economic Review, 90(4), 980-994. Isaac, R.M. and Walker, J.M. (1988). Group size effects in Public Good Provision: The Voluntary Contributions Mechanism Kerr, N.L. (1999). Anonymity and Social Control in Social Dilemmas. In Foddy, M., Smithson, M., Schneider, S. and Hogg, M. (Eds.), Resolving Social Dilemmas: Dynamic, Structural and Intergroup Aspects (pp103-120). Philadelphia: Psychology Press (Taylor and Francis Group). Komorita, S.S, Chan, D.K., and Parks, C.D. (1993). Journal of Experimental Social Psychology, 29, 252-267. Komorita, S.S, Parks, C.D., and Hulbert, L.G. (1992). Journal of Personality and Social Psychology, 62, 607-617. Ledyard, J.O. (1995). Public Goods: A Survey of Experimental Research. In Kagel, J.H., and Roth, A.E. (Eds), The Handbook of Experimental Economics (pp.111-194). Princeton: Princeton University Press. Messick, D.M., and McClintock, C.G. (1968). Motivational Bases of Choice in Experimental Games. Journal of Experimental Social Psychology, 4, 1-25. Parks, C.D. (1994). The predictive ability of social values in resource dilemmas and public good games. Personality and Social Psychology Bulletin, 20, 431-438. Parks, C.D. and Hulbert, L.G. (1995). High and Low Trusters' responses to Fear in a Payoff matrix. Journal of Conflict Resolution, 39, 718-730. Stroebe, W. and Frey, B.S. (1982). Self-interest and Collective action: The economics and psychology of public goods. British Journal of Social Psychology, 21, 121-137. Swap, W.C. and Rubin, J.Z. (1983). Measurement of Interpersonal Orientation. Journal of Personality and Social Psychology, 44(1), 208-219. Yamagishi, T. (1986). The Provision of a Sanctioning System as a Public Good. Journal of Personality and Social Psychology, 51(1), 110-116. Yamagishi, T. (1988a). Seriousness of Social Dilemmas and the Provision of a Sanctioning System. Social Psychology Quarterly, 51(1), 32-42. Yamagishi, T. (1988b). The Provision of a Sanctioning System in the United States and Japan. Social Psychology Quarterly, 51(3), 265-271. Zar, J.H. (1974) Biostatistical Analysis. Englewood Cliffs, New Jersey:Prentice Hall