External Matching Funds and the Provision of Public Goods: An Experimental Study

Abstract

The voluntary provision of a pure public good is studied in the presence of an anonymous external donor. New data generated using experimental procedures employing both extra-credit and cash incentives, as well as asynchronous access to real-time decision rounds lasting several days, are compared to previous data generated using traditional cash-only, synchronous-access laboratory procedures. The effect on resource allocations to the public good of introducing external matching funds is examined in two different settings, lump-sum matching and one-to-one matching. The new data confirm the robustness of results previously reported by the authors to the change in laboratory procedures and incentives. The new data are then used to extend the parameter space in which the two matching mechanisms are studied, including: varying within-round information regarding the current level of public-good allocations, varying the marginal rate of return from the public good, and varying group size from four to twenty group members.

JEL Classification: C91, H41