Free Rider Experiment

Leuthold, Jane H. "A Free Rider Experiment for the Large Class." The Journal of Economic Education. 24 (Fall 1993) 353-363.

This experiment explains the concepts of free riders and public goods. Students were informed that they each had a hypothetical $100 to invest. They could allocate their $100 according to their preferences between two assets: Asset A paying fixed return of 5% and Asset B paying a return of 10% on the total class investment, to be divided equally among all students in the class. Students were not allowed to communicate. They were given a handout explaining everything and filled out a questionnaire that asked their age, sex, college, and political party. The experiment is done at the end of class for compilation outside of class and allowing for students to think about the experiment. Before the experiment, public goods are covered in class. In the class period following the experiment, the concept of free riding was introduced. The students remained unaware of the purpose of the experiment and the information tying in to it. The results of the experiment are revealed and discussed in terms of free riders and public good. The experiment is repeated in groups of three with communication allowed. Those results are discussed and compared.