27th Social Engineering Forum

Date: December 4, 2006 15:00pm-16:30pm
Venue: Rm.607, West 9 building, Ookayama campus
Presenter: Koji Kotani (Yokohama National University)
Title: The Purchase of Moral Satisfaction, Warm Glow or a Helping Hand? An Exploration of the Nature of Voluntary Contributions (with, Kent D. Messer, William D. Schulze)
Abstract: Laboratory experiments consistently show higher levels of contributions in a voluntary public good setting than traditional theory predicts. While a potential explanation for this over-contribution is ‘warm glow,’ no explicit evidence exists regarding why and when people gain such glow and over-contribute. This research addresses this issue by introducing a ‘helping hand’ hypothesis, which asserts that when an external environment faced by the subject seems not to provide a socially optimal level of the public good (non-incentive compatible), the subject, to some degree, gains utility by taking socially responsible behaviors (offering a helping hand). Once an incentive compatible mechanism is established to provide a socially optimal level of the public good, the individual no longer offers a helping hand, but instead concentrates on maximizing personal payoffs. To test this hypothesis, we introduce a new voluntary contribution mechanism called the Proportional Contribution Mechanism. The mechanism, which is similar to a matching-grant, enables within-subject analysis of single-shot contribution behaviors when the mechanism is and is not incentive compatible. Experimental results support the helping hand hypothesis since subjects provide a helping hand by over-contributing only when the mechanism is not incentive compatible, and such over-contributions are positively correlated with the induced values of the public good. These results show that emergence of over-contributions in a voluntary setting highly depends on the efficiency of the mechanisms, and subjects will forgo selfish concerns to a certain degree when the incentive structure indicates that extra help is needed to achieve social optimality. In summary, it suggests the possibility that (i) people may honestly reveal their true (or warm-glow free) value of the public good even in a voluntary setting when the mechanism is made incentive compatible, and (ii) over-contributions reflect the value of public goods and are also interpreted as partial demand revelation.