Multilevel public goods game: Levelling up, substitution and crowding-in effects

Abstract

In an online multilevel public goods experiment, we implement four treatments where we gradually increase the marginal per capita return of the global public good. First, we find evidence of an increase in the contribution to the global good (levelling-up effect). Secondly, subjects fund their higher contribution to the global good by reducing their contribution to the local good (substitution effect) rather than by increasing total contribution, i.e., the sum of their contributions to the local and the global good (marginal crowding-in effect). Moreover, we observe that total contribution increases as a consequence of the mere introduction of the global good (categorical crowding-in effect). Finally, we observe that subjects continue to contribute to both public goods even when they are dominated in terms of costs and returns.