'Expressive' Obligations in Public Good Games: Crowding-In and Crowding-Out Effects

Abstract

We study individual behaviour in a repeated linear public good experiment in which, in each period, subjects are required to contribute a minimum level and face a certain probability to be audited. Audited subjects who contribute less than the minimum level are convicted to pay the difference between the obligation required and the voluntary contribution. We study the 'expressive' power of the obligations. While at early stages subjects contribute the minimum level, with repetition contributions decline below the required amount indicating that expressive obligations are not capable to sustain cooperation. We observe that expressive obligations exert a rather robust crowding-out effect on voluntary contributions as compared to a standard public good game. The crowding-out is stronger when payments collected by the monitoring activity are distributed to subjects rather than when they are pure dead-weight-loss.

The work was supported by a grant from MIUR (Ministero dell’Istruzione, dell’Università e della Ricerca).

Keywords: Expressive law, motivation crowding theory, laboratory experiments

JEL Classification: C91, H26, H41, K40