Competition and its effects on cooperation - An experimental test

This paper inquires experimentally whether competition has any impact on the individual disposition to contribute voluntarily to the provision of a public good. Participants perform a task and are remunerated according to two schemes, a non-competitive and a competitive one, then they play a standard public goods game. In the first scheme participants earn a flat remuneration, in the latter they are ranked according to their performance and remunerated consequently. Information about ranking and income before the game is played vary across three different treatments from no information, to information only about income, to full information about ranking and income. We find that competition per se does not affect the amount of contribution, and that there is a clear and strong negative income effect. Also, and in line with other studies, it emerges that the time spent to choose how much to contribute is negatively correlated with the decision of cooperating fully, suggesting that cooperation is more instinctive than non-cooperation. However, the main result is that information plays a crucial role: full information about the relative performance in the competitive environment enhances the cooperation, while partial information reduces it. This result is robust and the effects are large. We suggest a couple of tentative explanations, but further research is required.