- How to subsidize contributions to public goods: Does the frog jump out of the boiling water?
- Number of pages
- Amsterdam: Faculteit Economie en Bedrijfskunde
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
According to popular belief, frogs jump out of the water when the temperature is raised quickly while they are boiled to death when the water is gradually heated. In this paper, we investigate how humans respond to a very slow versus a very steep increase of a subsidy on contributions to a public good. In a series of experiments, we vary the mode of the increase (quick versus gradual). When the subsidy is raised to an intermediate level, we see hardly an effect in either treatment. When the subsidy is raised to a substantial level, there is a strong effect of a quick increase and a modest effect of a gradual increase in the subsidy.
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