CREED Seminars Amsterdam

Ro'i Zultan (Ben Gurion University, Israel)
Thursday, 31 March 2016

Public goods benefit the community without the power of exclusion. A public good, however, may be a public bad for certain members of the community, e.g., in not-in-my-backyard (NIMBY) problems. When the benefits of the public good exceed the harm inflicted on a minority, it is still socially desirable to provide the public good, and efficient provision may also be Pareto improving if the harmed minorities are compensated. We study experimentally voluntary contributions to public goods where provision is efficient, but harms a minority in the group. We test the effects of punishment and reward institutions, with and without communication. With harmed minorities, contributions are not viewed as unequivocally desirable and are not increased by communication or punishment. With the reward institution, communication facilitates compensation. Consequently, contribution is no longer viewed as negative, and majority contributions increase. Taken together, our results establish that the existence harmed minorities who are an integral part of the group dramatically change perceptions and behavior in voluntary contributions to public goods. We suggest team reasoning as the underlying mechanism