The limit to behavioral inertia and the power of default in voluntary contribution games

Abstract

It is well documented that people are reluctant to switch from a default option. We experimentally test the robustness of this behavioral inertia in a collective decision-making setting by varying the default option type and the decision-making environment. We examine the impacts of automatic-participation and no-participation default options on subjects' participation in a public goods provision and their contributions. Two variants of public goods game are employed: the linear and the threshold public goods games. The study shows the evidence of partial stickiness rather than complete stickiness of default options as indicated in empirical studies. Our experimental results square with the evidence of behavioral inertia only when the automatic-participation default is used. This default boosts contributions in the linear public goods game but not in the threshold public goods game. The evidence We thank Tim Cason, David Gill, Dan Houser, Juanjuan Meng, Andreas Ortmann, the editors, two anonymous referees and seminar participants at NTU, the International Meeting of the Economic Science Association (ESA) at New York University, the Australian Conference of Economists (ACE) in Melbourne, the Econometric Society North American Meeting at the University of Southern California, and the Asian Meeting of the Econometric Society at the National University of Singapore for their useful comments. Electronic supplementary materialThe online version of this article (doi:10.1007/s00355-017-1036-x) contains supplementary material, which is available to authorized users.

Information defaults in repeated public good provision

“…It shows that people tend to stay with the default option even though switching away from the default involves relatively low or zero cost. This phenomenon exists in various domains, such as organ donation (Johnson and Goldstein 2003), insurance choice (Johnson et al 1993), retirement saving (Madrian and Shea 2001) and voluntary contribution in public good provision (Cappelletti et al 2014;Carlsson et al 2015;Liu and Riyanto 2017). In a similar vein, we expect this behavioral inertia in our study.…”

“…The use of contribution defaults has been studied empirically in public good experiments. Those studies usually involve setting default options of contribution -either a fully passive default by contributing a certain amount (Messer et al 2007;Altmann and Falk 2009;Cappelletti et al 2014;Carlsson et al 2015) or a hybrid default by requiring one to actively decide the contribution amount, which is positive by default (Liu and Riyanto 2017).…”

Promoting socially desirable behaviors through persuasion and commitment: Experimental evidence

“…However, these incentive programs are costly to implement and even sometimes backfire (Gneezy et al, 2011); this in turn has drawn attention to the modalities of non-financial devices. In particular, laboratory experiments on public good games have shown how non-monetary incentives can be effective in increasing voluntary contributions and inducing pro-social behavior across a number of situations, as we see, among others, in the effect of nudges (Altmann and Falk, 2009;Liu and Riyanto, 2017), social interactions (Rege and Telle, 2004) and awards and disapproval (Sefton et al, 2007;Dugar, 2013;Masclet et al, 2003).…”

Positional Effects in Public Good Provision. Strategic Interaction and Inertia

“…7 Provided that αi, αj > 0 then αi − αi, αj − αj > 0, and therefore αi < αi + αj − αj and αj < αj + αi − αi. 8 [bII.2] is characterized by Aj ≤ X N ≡ wi ≤ Ai. Then • A sufficient condition for a shortage in provision is Ai ≤ X SO or equivalently v P i < αj.…”

“…In particular, when the default option is represented by one's previous action. 3 The status quo bias has been empirically analyzed in the literature (the more characteristic example is given by the agents' inclination to stick to their default option in saving for retirement), see Liu and Riyanto (2017) and references therein. In particular, these authors test the robustness of this hypothesis for public good games and find evidence of partial stickiness with respect to the default options.…”