This study reports the effects of rebate rules on voluntary contributions to a threshold public good. Rebate rules specify how excess contributions, over the threshold amount are distributed. We examine three rebate rules experimentally: a no rebate policy where excess contributions are discarded, a proportional rebate policy where excess contributions are rebated proportionally to an individual's contribution, and a utilization rebate policy where excess contributions provide some continuous public good. Significantly more Nash equilibrium outcomes are observed under the no rebate treatment than under either of the other two. Interestingly, the variance of contributions differs significantly between rebate treatments.
Bibliographical noteFunding Information:
This work was begun while Marks was funded through a fellowship from the Center on Philanthropy and the Eli Lilly Foundation and completed while Croson was visiting the Department of Economics at the University of Pittsburgh. Both authors would like to thank an anonymous referee, Raymond Battalio, Timothy Gronberg, James Walker and participants at the ESA conference for their comments. Thanks also to Joseph Cook, Brad Hampton, Richard Merrell, Bill Rankin, Mary Walters and John Wildenthal for help in running experiments, to Ido Erev for running simulations and to Linda Babcock for econometrics help.
- Public Good