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 |
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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