March 2006

IZA DP No. 2011: Heterogeneous Social Preferences and the Dynamics of Free Riding in Public Goods

substantially revised and split up versions published as: (1) 'Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Goods' in: American Economic Review, 2010, 100 (1), 541-556; and (2) 'The Behavioral Validity of the Strategy Method in Public Goods Experiments', Journal of Economic Psychology, 2012, 33 (4), 897-913

We provide a direct test of the role of social preferences in voluntary cooperation. We elicit individuals' cooperation preference in one experiment and make a point prediction about the contribution to a repeated public good. This allows for a novel test as to whether there are "types" of players who behave consistently with their elicited preferences. We find clear-cut evidence for the existence of "types". People who express free rider preferences show the most systematic deviation from the predicted contributions, because they contribute in the first half of the experiment. We also show that the interaction of heterogeneous types explains a large part of the dynamics of free riding.