EfD Discussion Paper,
Environment for Development, University of Gothenburg

Abstract: In this study, we examine institutional preferences, social preferences, and contribution in public goods games by conducting a lab-in-the-field experiment in rural China. Specifically, we examine whether people contribute differently depending on whether they are facing their preferred enforcement institution – punishment versus reward – and what factors are behind their institutional preferences. We find that subjects are more likely to choose reward than punishment. However, whether subjects’ preferred institution matches the exogenously assigned institution does not have significant impacts on their contributions in the public goods game. Moreover, we find that subjects who prefer punishment tend to be free-riders, which cannot be fully explained by strategic concern or game history. We further find that there is a robust relationship between the preference for the punishment institution and certain efficiency-reducing social preference profiles, such as anti-social preferences, which may help explain the institutional preferences.

Keywords: institutional preferences; reward; punishment; social preferences; cooperation; public goods game.

JEL-codes: C92; C93; D02

Language: English

34 pages, April 1, 2019

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