This paper presents how coordination of subjects’ choices and actions could be enhanced by introducing a first-mover in the experimental settings of a modified standard public good game. Exposed to a range of projects differing in their marginal rate of return, subjects choose frequently, despite the coordination problems, the socially most efficient project both out of selfish reasons, and of cooperative motivation. Some first-movers express belief in the cooperative intentions of followers by contributing relatively high. Others invest a lot due to seemingly strategic reasons involving the entire game. Some followers reciprocate or conform, while others decide to free-ride. With certain probability the evolution of the game allows for a stable high average level of contributions.
Author: Alex Naydenov
Year of publication: 2012
Keywords: behavioral economics, public goods, leadership, first mover, rationality