To analyse farmer cooperation, we will implement a pen-and-paper, incentivized experiment (where payment of participants is based on their decisions), which is the most common strategy to run experiments in economics. In addition, all participants will receive a fixed show-up or participation fee for taking out time to join the study.
The experiment will be a ‘threshold public good game’ (TPGG hereafter; Cadsby et al. 2008; Croson and Marks 1999; Suleiman and Rapoport 1992), where farmers allocate part of their experimental income to a common project that will give them benefits if a specific level of contributions is reached by the group as a whole. This game has been used in the past to explain how communities can come together to build bridges, dikes to prevent flood damage or how farmers can invest collectively in a pump to avoid waterlogging (Reinhard et al. 2022; Carlsson et al. 2015).
The experiment will be a 2 x 3 design, where the endowments of the participants vary, as well as the mode of enforcement (to reach the threshold of the public good). Thus, our experiment will be composed of six treatments, summarized as follows:
Equal endowments Unequal endowments
Baseline (No enforcement/No matching) T1 T2
Enforcement by a third party (fine) T3 T4
Matching of contributions by a third party T5 T6
There are other 5 games in addition to the TPGG: irrigation game, trust game, risk aversion, real-effort task and loss aversion. We will calibrate this to have similar average payments.
DESCRIPTION OF EXPERIMENTAL MECHANISMS
• Unequal endowments: In real life, not all farmers have the same resources or income to invest. Studies have shown that differences in these characteristics can hinder success in reaching the threshold of the public good by triggering a disagreement about how to properly take this heterogeneity into account. We will include in our experiment treatments with unequal incomes across all participants (T2, T4, T6 above) and treatments with equal incomes (T1, T3 and T5 above) with the objective of understanding how the burden of contributions is shared by participants.
• Enforcement mechanism: The enforcement mechanism will be a third-party (centralized), automatically applied fine to the lowest contributor if the threshold for implementation of the public good is not reached (Andreoni and Gee 2015; Kamijo et al. 2004). The fine will be proportional to the contribution of the participant who is the lowest contributor (that is, we will consider that the inequality of endowments impacts absolute contributions when calculating the fine; Brekke et al. 2017). These sanctions are formal, third-party sanctions (to mimic the ones given by local governments to farmers).
• Matching mechanism: We will implement a simple 1-to-1 matching of contributions if the threshold is reached (Gee and Schreck 2018; Helms McCarty et al. 2018; Knutsson et al. 2019). In other words, if the threshold is reached, a similar amount will be put forward by the third party. Offering matching funds reduces the cost of contribution (Vesterlund 2016) and increases the likelihood of giving towards a project, charity (Karlan and List 2007) or in our case, a TPGG (Rondeau and List 2008). We would be extending this line of research for the case of the Global South, where local institutions usually drive initiatives to improve farmers’ profits and for the case of TPGGs.