Frisch/CREE seminar: Andreas Lange, University of Hamburg
Providing (Impure) Public Goods under Risk
Abstract. By means of a lab experiment, we analyze the impact of environmental risks on the (successful) provision of public goods. By treating the own return from one's contribution separately from the others' return from one's contribution, we are able to manipulate the risks in the two components of the return independently. This design allows us to, first, oppose the behavioral effect of the presence of risk in the own vs in the other group members' return from an individual's contribution. We find that risk in the returns from/to others' has a negative impact on contributions. In addition, we allows the risks to be positively or negatively correlated or independent. Risk in both components of the return is found to have a strong negative impact on the public good provision, unless when negatively correlated. Our results relate to the provision of environmental (impure) public goods, being especially interesting for the recent occurences of providing such goods, crowdinvesting and microlending.