This paper studies how risk impacts the voluntary provision of public goods. In a laboratory experiment, we create variants of a public good game by separating the return a subject’s contribution generates for herself vs. the return her contribution generates to others. We find a detrimental effect of risk on public good provision when returns in both dimensions are positively correlated or independent. A negative correlation leads to more stable investments. Disentangling the impact of risk in each dimension, we find that investments particularly respond to risk in the return to others. Investigating the impact of these different types of risks can inform theories on the nature of social preferences.
This paper studies how risk impacts the voluntary provision of public goods. In a laboratory experiment, we create variants of a public good game by separating the return a subject’s contribution generates for herself vs. the return her contribution generates to others. We find a detrimental effect of risk on public good provision when returns in both dimensions are positively correlated or independent. A negative correlation leads to more stable investments. Disentangling the impact of risk in each dimension, we find that investments particularly respond to risk in the return to others. Investigating the impact of these different types of risks can inform theories on the nature of social preferences.