Template-type: ReDIF-Paper 1.0
Author-Name: Koji Kotani
Author-Name-First: Koji
Author-Name-Last: Kotani
Author-Email: kkotani@iuj.ac.jp
Author-Workplace-Name: International University of University
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Author-Name: Kent D. Messer
Author-Name-First: Kent
Author-Name-Last: Messer
Author-Workplace-Name: University of Delaware
Author-Workplace-Homepage: http://www.udel.edu/
Author-Name: William D. Schulze
Author-Name-First: William
Author-Name-Last: Schulze
Author-Workplace-Name: Cornell University
Author-Workplace-Homepage: http://www.cornell.edu/
Title: The Nature of Voluntary Public Good Contributions: When are They a Warm Glow or a Helping Hand?
Abstract: "Warm glow" has been proposed as an explanation for public good contributions that exceed traditional theoretical predictions, yet little is known about why and when people exhibit warm glow in some voluntary settings. To investigate these issues, this research develops a model for the ``helping hand" hypothesis as an extension of warm glow. The hypothesis asserts that when an external environment faced by the subject seems not to provide a socially optimal level of the public good (non-incentive compatible), the subject, to some degree, gains utility by undertaking socially responsible behavior (offering a helping hand), and thus she over-contributes. Once the mechanism is established to be incentive compatible, the individual no longer offers a helping hand, but instead concentrates on maximizing her personal payoffs as predicted by the Nash equilibrium. Experimental results support the helping hand hypothesis, and show that contributions depend on the efficiency of the mechanism and not whether it is voluntary. We also find that contributions are positively correlated with an induced value of the public good even when free-riding is a dominant strategy in an non-incentive compatible mechanism. This would suggest that people's social preferences depend on an induced value of the public good and possess an efficiency concern.
Classification-JEL: 
Length: 35 pages
Creation-Date: 2009-04
Number: EMS_2009_08
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2009_08.pdf
File-Format: Application/pdf
File-Function: First version, 2009
File-Size: 1605KB
Keywords: public goods, voluntary contributions, experimental economics, warm glow
Handle: RePEc:iuj:wpaper:EMS_2009_08