Abstract
We revisit the question of whether a refund increases efficiency in threshold public good games. New experimental evidence is presented on the effect of endowment size. We demonstrate that a refund increases efficiency if and only if the endowment is small relative to the threshold. We also propose a novel way to analyze the effect of a refund. Specifically, we argue that a refund increases efficiency only if significantly many groups converge towards zero contributions in the absence of a refund.
| Original language | English |
|---|---|
| Pages (from-to) | 29-33 |
| Number of pages | 5 |
| Journal | Economics Letters |
| Volume | 134 |
| Early online date | 11 Jun 2015 |
| DOIs | |
| Publication status | Published - Sep 2015 |
Keywords
- Public good
- Threshold
- Refund
- Money back guarantee
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Cite this
Cartwright, E., & Stepanova, A. (2015). The consequences of a refund in threshold public good games. Economics Letters, 134, 29-33. https://doi.org/10.1016/j.econlet.2015.05.032