Weakest Links in Space: on the Voluntary Provision of Public Goods in overlapping Neighborhoods

Abstract

We report laboratory evidence on the voluntary provision of weakest-link public goods in a novel spatial setting. Subjects are located on a circle and interact in overlapping neighborhoods. We investigate how endowment heterogeneity and the spatial distribution of endowments affect the final provision of the public good. We find that the detrimental effects of endowment heterogeneity arise specifically when endowment types are clustered, but not when high and low types alternate. In all settings, players provide in-kind transfers only within their own neighborhood. Replacing direct transfers by an intermediary common account to overcome transfer coordination does not improve average weakest links public good provision, but can decrease inequality depending on the spatial clustering of endowments in space. Joint paper with Lorenzo Romero-Fernández.