Answer to Question #173811 in Economics of Enterprise for Sarah

Question

Within a voluntary contribution game, the Nash equilibrium level of contribution is zero, but in experiments, it is often possible to sustain positive levels of contribution for a long period.  How might we best explain this?

Participants are altruistic, and so value the payoff which other participants receive, benefiting (indirectly) from making a contribution.

Participants believe that if they make a contribution, then other participants will be more likely to make a contribution.

Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperation.

Participants in experiments believe that they have to make contributions in order to receive any payoff from their participation.

Answer 1

Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperation.