Analysing group contract design using a threshold public goods experiment

Jetske A. Bouma*, T. T.Binh Nguyen, Eline Van Der Heijden, Justin J. Dijk

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


This paper presents the results of a threshold public goods game experiment with heterogeneous players. The experiment is designed in close collaboration with the Dutch association of agri-environmental farmer collectives. Subjects are recruited at a university (study 1) and a farm management training centre (study 2), the subjects of the second study most resembling the subjects in the field. The experiment consists of several treatments and each treatment has two different distribution rules, which are varied in a within-subjects manner. After subjects have experienced both, they can vote for one of the two rules: either a differentiated bonus that results in equal payoff for all, or an undifferentiated, equal share of the group bonus. In a between-subjects manner, subjects can vote for a (minimum or average) threshold or are faced with an exogenous threshold. The results indicate that exogenous thresholds perform better, possibly because the focal point they provide facilitates coordination. With regard to the two distribution rules, the results are mixed: in study 1, average contributions and payoffs are higher under the 'equal-payoff' rule, but there is no significant difference between the two in study 2. Overall, our results suggest that environmental payment schemes should consider cost heterogeneity in the design of group contracts, and pay explicit attention to coordination problems too.

Original languageEnglish
Pages (from-to)1250-1275
Number of pages26
JournalEuropean Review of Agricultural Economics
Issue number3
Early online date23 Dec 2019
Publication statusPublished - 15 Jun 2020


  • collective agri-environmental management
  • distribution rules
  • endogenous choice
  • group contracts
  • heterogeneous subjects
  • threshold public goods games

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