An Application of the English Clock Market Mechanism to Public Goods Games

We conducted a laboratory study with a public goods game in which contributions are not submitted all at once but incrementally as coordinated in real time by a clock. Individuals press a button as soon as the clock equals their willingness to contribute. This public goods institution exploits the idea that people are conditionally cooperative (i.e., they match at least the minimum contribution of the others) rather than opportunistic in order to implement the Pareto-optimal outcome. By providing information about the point at which subjects stopped further contributions we found that the decision of a subject to stop contributing induced an immediate reaction of the other group members. As a consequence, the individual contributions were closely related to each other and a fairer income distribution was achieved than in the standard case in which only aggregated information was supplied after each period.