Germany versus China: How does social distance influence public good behavior?

Abstract

Public good contributions have been an interest for many experimental economists, since evidence has shown that people do not always behave rationally and inefficient equilibria are not always realized. This research compares a public good game run in both China and Germany with three treatments in which the social distance factor varies. The outcome shows that under a condition of high social distance, Chinese and German behavior differs with German subjects contributing more to the public good. As social distance decreases, both samples converge to insignificantly different averages of contribution. It is also found that people’s contribution is positively correlated with their guess and level of anonymity: the more their identity is exposed, the more they give and the more they believe the other is giving.

Appendix 1: instruction from the Invisible treatment (translated)

This is an experiment, the answers to which serve exclusively for the purpose of research and will only be reported collectively. No individual or personal information will be used or for any other purpose.

You will play a game with another person and each of you receives 50 points as an initial endowment. You can choose an amount from 0 to 50 to invest in a common fund, the rest of your endowment will go to your private fund. After you and the other person have made your decision, we will collect your answer and match your answers. The points that you and the other put in the common fund will be multiplied by 1.5 and divided equally between the two of you. Your final payoff will come from two sources: your private fund (the amount that was left from your initial endowment) and your share from the common fund.

Example 1: You decide to invest 50 points in the common fund. The other person decides to invest 50 points in the common fund. Hence the common fund is: 50 + 50 = 100 (points).

$$ \text{Your final payoff} \, = \, 0 \, \left( {\text{private fund}} \right)\, + \,\frac{(100\, \times \,3/2)}{2} = 75\,(\text{points}) $$

Example 2: You decide to invest 0 point in the common fund. The other person decides to invest 0 point in the common fund. Hence the common fund is: 0 + 0=0 (point).

$$ \text{Your final payof}f\, = \,50 \, \left( {\text{private fund}} \right)\, + \,\frac{(0\, \times \,3/2)}{2}\, = \,50\,(\text{points}) $$

Example 3: You decide to invest 20 points in the common fund. The other person decides to invest 10 points in the common fund. Hence the common fund is: 20 + 10 = 30 (points).

$$ \text{Your final payoff}\, = \,30 \, \left( {\text{private fund}} \right)\, + \,\frac{(30\, \times \,3/2)}{2}\, = \,52.5\,(\text{points}) $$

If you have any other further questions, please raise your hand. Do not discuss with other people.

• 1. How much do you guess the other person is investing in the common fund?

• 2. How much do you decide to invest in the common fund?

Thank you very much.