To tender or not to tender?: deliberate and exogenous sunk costs in a public good game

Heine, Florian; Sefton, Martin

Abstract

In an experimental study, we compare individual willingness to cooperate in a public good game after an initial team contest phase. While players in the treatment setup make a conscious decision on how much to invest in the contest, this decision is exogenously imposed on players in the control setup. As such, both groups of players incur sunk costs and enter the public good game with different wealth levels. Our results indicate that the way these sunk costs have been accrued matters especially for groups on the losing side of the contest: Given the same level of sunk costs, contributions to the public good are lower for groups which failed to be successful in the preceding between-group contest. Furthermore, this detrimental effect is more pronounced for individuals who play a contest with deliberate contributions before.

Citation

Heine, F., & Sefton, M. (2018). To tender or not to tender?: deliberate and exogenous sunk costs in a public good game. Games, 9(3), Article 41. https://doi.org/10.3390/g9030041

• Journal Article Type: Article
• Acceptance Date: Jun 25, 2018
• Online Publication Date: Jun 26, 2018
• Publication Date: Jun 26, 2018
• Deposit Date: Aug 23, 2018
• Publicly Available Date: Aug 23, 2018
• Journal: Games
• Publisher: MDPI
• Peer Reviewed: Peer Reviewed
• Volume: 9
• Issue: 3
• Article Number: 41
• DOI: https://doi.org/10.3390/g9030041
• Keywords: Statistics, Probability and Uncertainty; Statistics and Probability; Applied Mathematics
• Public URL: https://nottingham-repository.worktribe.com/output/1046073
• Publisher URL: http://www.mdpi.com/2073-4336/9/3/41