Public Goods Games

This section of the course covers the dynamics of cooperation in organisations, using the social dilemma as a framework. The social dilemma is a situation where individuals benefit from the fruits of others’ labor without contributing much themselves, but if everyone behaves this way, there will be no fruits to enjoy. The public goods game, a game theoretical version of the social dilemma, is used to model the behavior of groups of individuals trying to achieve a common goal. Public goods are resources that all can benefit from, regardless of whether they contribute to their provision. Examples of public goods games include storekeepers investing in improving the street where their shops are located and people using a city park. Free riders are individuals who enjoy the benefits of public goods without making any contribution. A lab version of the public goods game shows that the Nash equilibrium is zero contributions by all, but in reality, people tend to contribute something. Repeated play public goods games involve the same group of individuals playing the basic game over a series of iterations. Punishment is used in some experiments to discourage free riding.