NON-MONETARY INCENTIVES AND OPPORTUNISTIC BEHAVIOR: EVIDENCE FROM A LABORATORY PUBLIC GOOD GAME

Authors

  • SUBHASISH DUGAR

    1. Dugar: Assistant Professor, Department of Economics, 2500 University Drive, NW, University of Calgary, Calgary, Alberta T2N 1N4, Canada. Phone 403 220 5291, Fax 403 282 5262, E-mail sdugar@ucalgary.ca
    Search for more papers by this author
    • The same study was previously distributed with the title “Asymmetric Behavioral Effects of Informal Sanction and Reward on Cooperation in an Experimental Public Good Game.” I am indebted to two anonymous referees and the associate editor of the journal, Tim Brennan, for their invaluable help.


Abstract

This study reports data from a laboratory experiment that investigates the incentive effect of three distinct social communication schemes on free-riding behavior. We use performance-based approval and disapproval ratings and a linear public good game to address the above issues. The treatments vary in terms of subjects' opportunities to anonymously assign (1) only the approval ratings to other group members, (2) only the disapproval ratings to other group members, and (3) either the approval or the disapproval ratings to other group members (but not both to the same group member), after they play a standard linear public good game. Despite the Nash prediction of zero individual contribution in all three treatments, the data show that the disapproval points generate significantly higher contribution than the approval points. The treatment in which subjects could communicate either the approval or the disapproval points produces the highest level of contribution. We discuss the implications that these findings may have for efficient design of organizations. (JEL D03, H41, C72, C92)

Ancillary