This experiment will be conducted by the experimental laboratory of the University of Hamburg (Germany) in an online setting. The experiment will make use of a weakest-link public good game with 6 different treatments. In particular, participants will be assigned to groups of 6 players who interact in a 10-round public good game. The addition of overlapping neighborhoods extends the standard public good game in this study.
At the beginning of each of the 10 rounds, each participant is allotted again her initial income and the game is repeated. In other words, there is no possible transfer of tokens between rounds. Each plyer decides in each round how many tokens to invest in the public good in her own position, how many to invest by an in-kind transfer to any other location, and how many to keep in her account. At the end of each round, each participant will get an outcome given by the tokens that she has left minus the transfers that she made and the payback from the public good provided at her position. The public good has a unitary cost of 1 and each participant gets a benefit of 2.5 times the amount of public good provided at her place. The formula for the outcome for a player I is then: Outcome = Tokens remaining in own account MINUS Sum of Tokens invested in any location PLUS 2.5*Amount of total investment at her position.
In treatment 1, a group of 6 players is organised in 2 subgroups of 3 participants each. In this treatment, all participants have a homogeneous income of 30 tokens each. In each of these subgroups, each participant makes a decision on how many of these 30 tokens to invest in her own position and how many to transfer and to which groupmate. The investment in the public good are aggregated by a weakest-link technology, so the amount of public good provided to each participant in a subgroup is the minimum amount invested by any of them plus the potential transfers received from the others.
In treatment 2, a group of 6 players plays a public good game in a virtual circular neighbor. All 6 participants have a homogeneous income of 30 tokens. In this case, the provision of the public good in the position of a player will be driven by the minimum provided in the neighbourhood formed by her, and her right- and left-hand neighbors. This way of aggregating the investments will create 6 overlapping neighborhoods, one for each participant.
Treatments 3 and 4 have the same setting as treatment 2, but they have heterogeneous income for the participants – in each group, 3 participants will have a high income of 40 (H), and 3 will have a low income of 20 (L). In treatment 3, the participants are spatially distributed alternatively regarding their type (H-L-H-L-H-L), while in treatment 4 they are clustered together (H-H-H-L-L-L).
Treatment 5 and 6 have the same payoff structure as treatments 3 and 4, but investments can only be made at the own location of a participant and into a common chest. The total amount invested into the common chest works is divided up equally between the three low-endowment participants.