Public Goods

Leuthold Jane N. "A Public Goods Experiment for the Classroom." The Journal of Economic Education. 18 (Winter 1987) 58-65.

This experiment discusses the problems in the understanding of public goods and joint consumption. Students are put into pairs and are individually designated A or B. This simulation allows for four experiments. For each experiment, one of the students is designated controller, who chooses one of five different options that denote the levels of the good. Each student knows the value of each of these levels, given by the teacher. The first and second experiments allow the students to know their own payoffs, but they are not required to share this knowledge with their partner. Student preferences change from the first to the second experiment. In the third (identical preferences) and fourth (different preferences) experiments, they know both payoffs. The payoffs are found in the Appendix of the article. Within each group, students try to bargain with one another with attempts to sway the controller. The agreement reached must be signed (form in article). After the agreement is signed, public goods are explained to the students and the marginal cost is seen and the payoff is computed (explained in the experiment). The payoffs are the surpluses that would come about due to this public good. For each experiment, partners change and each student is controller twice.