Voluntary Standards and Coordination in Public Goods Games

Abstract

Contributions to public goods are often unobservable. In order to make contributions visible, voluntary standards are used, which make a particular contribution level publicly observable. This paper investigates the effect of such partial information on the contributions to public goods. First, we observe that the implementation of a too low standard level leads to the lowest efficiency. Second, we find that standards function as a coordination device. Higher standards give rise to higher modal contribution but the likelihood that the standard level is reached gets lower. Third, conditional cooperation is observed in the sense that subjects are more likely to comply with the standard as the number of group members who previously complied with it is higher.