Culture, social preferences and beliefs in public goods game
Kean Siang, CH’NG
Economics Department
School of Social Sciences
Universiti Sains Malaysia
Email: [email protected]
Phone: +6046534623
Fax: +6046530718
Abstract
Budget constraints at the local government level toward the provision of public goods
have fuelled interest in the voluntary contribution mechanism. However, the literature
shows free riding behavior and socially inefficient contribution levels plague the
mechanism. This paper experimentally tests the effect of cultural and historical
information pertaining to heritage houses in Penang (Malaysia) on public
contributions for their conservation. The study uses specially designed public
goods game to measure people’s cooperation preference and belief.
Experimental subjects are asked about their cooperation preference given the
cooperation level by other subjects in the same group. They then play the public
goods game in a sequence of 10 one shot game. In the game, we also elicit their
beliefs about other’s contribution. The study applies this method in two
different treatments, 1) in the first treatment (i.e. CUL treatment), the students
are shown a slide show displaying the historical and cultural background of an
ethnic group and its relation to the heritage houses, and 2) in the second
treatment (i.e. CONTROL), subjects play a normal one shot public goods game
without the cultural information. The data show that people differ strongly in
their cooperation preferences in the two treatments. The method also allows
one to investigate how the preference heterogeneity and beliefs are related in
determining cooperation in the two treatments. The main result shows decline
in cooperation level because people are imperfect condition cooperators, who
match other’s contribution only partly. We find that cooperation level is
positively correlated with the preferences and depends directly on the belief of
other’s cooperation. This suggests subjects’ cooperation level in the game is
dominantly determined by others’ action rather than own preferences. Result in
CUL treatment shows more consistent and stable cooperation and belief about
others’ cooperation than CONTROL. Subjects in CUL match their belief about
others’ action by contributing close to their belief compared to subjects in
CONTROL. The lack of knowledge and information about the background of the
heritage houses maybe the reason of its low conservation, the findings in the
paper provide important suggestion that incorporating cultural and historical
information could encourage more pro-social behaviors.
Keywords Voluntary contribution · Heritage houses · Conservation · Cultural and
historical information · Public good game
JEL Classification C92 · H41