Abstract

This talk presents experimental evidence for a new game capturing the strategic interaction between donors and providers of public goods. The game is inspired on payments for ecosystem services, while it is equally relevant for other transfer payment schemes aiming to enhance public good provision. I organize the results around three complementary studies, analyzing different institutional arrangements: equal distribution of payments and conditionality (study 1); proportional payments, individual payments and additionality (study 2); and competition among public good providers (study 3). The results show that equal payments to all public good providers do not increase public good provision as compared to settings with no payments. Moreover, all transfer payments that link relative high effort to relative high payments are similarly capable of enhancing public good provision. Lastly, conditionality and additionality do not increase public good provision but achieve it at a lower cost to donors.

Practical information