Threshold-Level Public Goods Provision with Multiple Units: Experimental Effects of Disaggregated Groups with Rebates

Abstract

We introduce two institutions that provide multiple public good units, assuming that a market-maker has the ability to establish groups of contributors. We set up an experiment where either all N individuals form one group to provide two units (aggregated approach), or divide the N participants into two groups, and each group provides one unit separately, with all individuals benefiting from any unit(s) provided (disaggregated approach). Our results show that the disaggregated approach produces higher contributions on average. We also find that the rebate of excess contributions has a larger influence in increasing contribution under the aggregated approach. (JEL D71, H41)