Year
2021
Abstract
This paper analyses the equilibrium of a two-person “pledge and give” game and tests its predictions in a lab experiment. Each person’s endowment is private information. In the first stage, each agent informs the other about the amount he/she intends to give. In the second stage, each agent makes a contribution to the joint donation. We show that a linear pledge function can be an equilibrium of the game. Furthermore, if agents have a strong taste for conformity, the equilibrium donation is positively related to one’s own endowment and to the pledge of his partner. In the lab, subjects pledged on average 60% of their income and donated on average 50% of their income. High pledges foster the generosity of the partner: an agent will increase the donation by 20 cents on average if the partner pledges one extra euro.
BESANCENOT, D. et VRANCEANU, R. (2021). The generosity spillover effect of pledges in a two-person giving game. Journal of Behavioral and Experimental Economics, 90, pp. 101630.
Keywords