Threshold inequality in a public good experiment

Abstract This experimental study introduces a threshold inequality into a classic threshold public goods game to understand coordinating behavior under asymmetric conditions. We use a novel design with “advantaged” players who have a lower threshold than a “disadvantaged” player, reflecting real-world public good scenarios. The threshold inequality disrupts the efficient coordination we observe in the control sessions leading to welfare losses relative to a control group without a disadvantaged player. Threshold inequality creates opportunities to help a disadvantaged player while enabling advantaged players to potentially free ride. We find evidence that threshold inequalities make the Pareto efficient provisioning of public goods more challenging, leading to suboptimal outcomes.