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Estimating the causal effect of beliefs on contributions in repeated public good games

Published online by Cambridge University Press:  14 March 2025

Alexander Smith
Alexander Smith*
Affiliation:
Department of Social Science and Policy Studies (SSPS), Worcester Polytechnic Institute (WPI), 100 Institute Road, Worcester, MA 01609, USA
*
e-mail: adksmith@wpi.edu
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Abstract

We use instrumental variables for estimating the causal effect of beliefs on contributions in repeated public good games. The effect is about half as large as suggested by ordinary least squares. Thus, we present evidence that beliefs have a causal effect on contributions, but also that beliefs are endogenous. We compare the causal, belief-based model of contributions to alternative models based on matching the previous contributions of others and responding to one’s deviation from the average in the previous round. The causal, belief-based model performs well, indicating that beliefs have a central role in determining contributions.

Keywords

Public good gamesBeliefsConditional cooperationReciprocityInstrumental variables

JEL classification

H41: Public Goods C91: Laboratory, Individual Behavior C81: Methodology for Collecting, Estimating, and Organizing Microeconomic Data • Data Access C92: Laboratory, Group Behavior
Type
Original Paper
Information
Experimental Economics , Volume 16 , Issue 3 , September 2013 , pp. 414 - 425
Copyright
Copyright © 2012 Economic Science Association

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Footnotes

Electronic Supplementary Material The online version of this article (doi:https://doi.org/10.1007/s10683-012-9345-5) contains supplementary material, which is available to authorized users.

Financial support from Worcester Polytechnic Institute (WPI) is gratefully acknowledged.

The author thanks John Spraggon, Younghwan Song, two anonymous reviewers, Editor Jakob K. Goeree, seminar participants at Union College, and conference participants at the 2011 CEAs in Ottawa, the 2011 International ESAs in Chicago and the 2011 North American ESAs in Tucson for excellent comments and suggestions. Financial support from Worcester Polytechnic Institute (WPI) is gratefully acknowledged.

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