On the Impact of Risky Private and Public Returns in the Private Provision of Public Goods - the Case of Social Investments

Freundt, Jana; Lange, Andreas

doi:10.2139/ssrn.3338812

Cited by 1 publication

(1 citation statement)

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“…Loss‐averse individuals (Kahneman & Tversky 1979, Tversky & Kahneman 1991) may consider it more difficult to cooperate in these environments than in others where returns are certain. Many scholars explored the influence of risk on prosocial behavior in different settings such as risk preferences over own and social risk (Harrison et al., 2013), private and public investment dimensions (Freundt & Lange, 2019), ambiguity (Björk et al., 2016), and time preferences (Andersen et al., 2008). The striking point is that risk discourages cooperative behavior.…”

Section: State Of the Artmentioning

confidence: 99%

Do risk and competition trigger conditional cooperation? Evidence from public good experiments

Bergantino

Gil-Gallen

Morone

2021

Ann Public Coop Econ

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We investigate the effect of intra‐group competition and risk marginal per capita returns on subjects' cooperative behavior in a one‐shot public good game—following the well‐known approach proposed by Fischbacher, Gächter, and Fehr (2001) and extending the Colasante et al. (2018, 2019) parametrization. We study the interaction between environment and social preferences and test the existence of a causal relationship of risk and competition over cooperative behavior when an individual's benefit of the public good is heterogeneous and uncertain. Our results report experimental evidence about competition fostering cooperative behavior leading to a rise in contribution for all the subjects regardless of their social preferences. However, risk has a detrimental effect on cooperative behavior due to encouraging free riding.

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