Public Good Provision, Punishment, and the Endowment Origin: Experimental Evidence

Abstract

We study contributions and punishment in a linear public goods game, where group members differ in the sources of their endowments. We compare homogenous groups in which subjects are exogenously assigned to the same endowments with heterogeneous groups in which half of the group members invest real effort to earn their endowments, while the other half are granted with a windfall amount of equal size. We illustrate, that independent of group composition, free-riding becomes the ubiquitous form of behavior over time if group members cannot sanction each other. If punishment opportunity is present, contributions constantly increase over time, albeit we find differences neither in contributions nor in punishment across heterogeneous and homogenous groups. Furthermore, we also manifest that different subject types make similar contributions in heterogeneous groups. We conjecture that effort invested to earn the endowment seems not to cause conflicting normative views on appropriate contributions among subject types. Nevertheless, within heterogeneous groups subjects, who exert real effort to earn their endowments, punish less severely than those receiving windfall endowments.