Faculty Advisor

Smith, Alexander D.

Abstract

I present a dynamic public good experiment where subjects endogenously determine contribution productivity by engaging in costly investment. Subjects complete two sequences of ten rounds of decision making. The level of contribution productivity builds from round to round as a function of investment. After investing, subjects decide how much of their remaining endowments to contribute to the public good. I examine if there is a learning effect between the sequences and if subjects are able to behave close to the social optimum. I observe that in Sequence 2, the average rate of investment and the average total profits are closer to the social optimum, indicating that subjects are cooperating and learning the incentives to invest in the public good.

Publisher

Worcester Polytechnic Institute

Date Accepted

March 2016

Major

Economic Science

Project Type

Major Qualifying Project

Accessibility

Unrestricted

Advisor Department

Social Science and Policy Studies

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