Public Observability of Decisions and Voluntary Contributions in a Multiperiod Context

Abstract

The authors conduct an experiment to explore whether contributions to a public good increase when public observation of contribution decisions is possible and whether any such increase is durable and transferable. Rege and Telle (2004) find that in one-shot games, public observation of all individuals' contribution decisions leads to higher contributions than would occur in the absence of such observation. In this study, the authors argue that public observation is ineffective in increasing contributions in a repeated game. Indeed, it actually reduces contribution rates relative to a treatment in which contribution decisions are not observable. Furthermore, prior experience with public observability reduces cooperative behavior in subsequent interaction in which decisions cannot be observed. The authors conjecture that approval incentives are more effective in leading to cooperative behavior when sanctioned parties are unable to avoid the expressions of disapproval they receive.