Public goods game
Published:
The public goods game is a standard game in experimental economics. In the basic game, subjects secretly choose how many of their private tokens to put into a public pot. The tokens in this pot are multiplied by a factor (greater than one and less than the number of players, N) and this “public good” payoff is evenly divided among players. Each subject also keeps the tokens they do not contribute. It is a prisoner’s dilemma-like game.
The group’s total payoff is maximized when everyone contributes all of their tokens to the public pool. However, the Nash equilibrium in this game is simply zero contributions by all; if the experiment were a purely analytical exercise in game theory it would resolve to zero contributions because any rational agent does best contributing zero, regardless of whatever anyone else does.
Depending on the experiment’s design, those who contribute below average or nothing are called “defectors” or “free riders”, as opposed to the contributors or above average contributors who are called “cooperators”.
It was applied to study sociology terms as group cohesion or cultural norms. There is also used to study cultural differences.
See also
Material
- http://www.univie.ac.at/virtuallabs/PublicGoods/mixed.html
- http://www.univie.ac.at/virtuallabs/PublicGoods/index.html#pgg
Papers
- Bayer, R. C., Renner, E., & Sausgruber, R. (2010). Confusion and Learning in the Public Goods Game. University of Adelaide, School of Economics.
- Sefton, M.; Shupp, R.; Walker, J. M. (2007-04-16). The Effect of Rewards and Sanctions in Provision of Public Goods. Economic Inquiry 45 (4): 671–690.