Doctoral Dissertation Research: Discounting the Future in Strategic Interactions in a Heterogeneous Population

University Of Washington, Seattle WA

Investigators

Abstract

Increased diversity, in the form of ethnicity and other dimensions of social identity, is associated with decreased provision of public goods (Easterly and Levine, 1997; Alesina et.al, 2003). Most studies, however, do not consider the implicitly embedded temporal dimension in the provision of public goods, i.e. often the costs are incurred now and the benefits from the public good received later. While a voluminous and growing literature investigates intertemporal choices in individual decisions, other than Deck and Jahedi (2011) - who examine discounting behavior in a competitive environment - there is little research providing empirical evidence on how individuals make intertemporal choices in strategic interactions. In this project the co-PI will address: 1) how the timing of benefits affects voluntary contributions when the benefits are realized in the future, including whether expectation of how others' discount the future influences decision-making, 2) how the timing of contributions affects voluntary contributions, and 3) how individuals discount future provision of public goods in strategic, socially heterogeneous environments. To address these questions, the study employs a novel experimental design that varies (a) the timing of benefits received from public goods and from private consumption in a Voluntary Contribution Mechanism (VCM) game, (b) the timing of contributions towards public goods in the VCM game, and c) the social heterogeneity of participants in the public goods game based on their affiliation with student cultural organizations. In terms of broader impacts, this research will help shed light on the roles of social distance, temporal preferences and their interactions in the provision of public goods. Empirical findings that behaviorally unpack the role of time and social preferences in collective action scenarios will contribute to explaining the mechanisms of non-cooperation when heterogeneous populations interact to provide public goods with delayed benefits. Furthermore, the findings of such a line of inquiry could inform many policy and real-life decisions, in addition to other intertemporal choices that have a strategic component to them. Study findings will be of relevance to scholars and policy-makers concerned with intertemporal choice and the provision of public goods.