Public goods and bads with vulnerable individuals: How information and social nudges change behaviour

Abstract

In a diverse society, heterogeneous returns to public goods (PG) and public bads (PB) are more often the rule rather than the exception, and often the returns from the public pool are such that individuals who are most affected no longer have incentives to free ride on others. We consider this set-up through a laboratory experiment and investigate how heterogeneity of marginal per capita returns (MPCRs) affect economic cooperation in both PG and PB games. We also examine whether information on heterogeneity—no information, information and information with a plea to help those who are most affected by the public pool—changes cooperation. Our results show that information regarding the heterogeneity does not change individual behaviour in both PG and PB games. However, a social plea to help individuals with MPCRs of 1.20 increases average group efficiency. Average individual contributions under the social plea treatment are either maintained or increased. Those with MPCRs of 1.20 are more cooperative than their counterparts but not as completely as theoretically predicted. The exact same individual is also more cooperative under a PG game than under a PB game; a result that remains unchanged whether MPCRs are homogeneous or heterogeneous.