Rules and theoretical prediction
In a typical public goods game, four players each receive 20 tokens. Each puts any amount into a common pool, which is multiplied by a factor greater than one but less than the number of players (for example, 1.6) and shared equally among the four. A token I contribute returns only 0.4 tokens to me, so if I care only about myself, contributing nothing is best. Everyone doing so is the Nash equilibrium, yet if everyone contributed everything each would receive 1.6 times as much and all would be better off. This conflict between individual and group interest reproduces the free-rider problem and the collective action problem in the laboratory. Isaac and Walker (1988) analyzed how group size and the individual return affect contributions.
Results: decay and conditional cooperation
In experiments, participants typically contribute 40 to 60 percent of their endowment at first, but contributions decline as the game is repeated. Andreoni (1988) tested whether this decline simply reflected learning the rules and found that contributions rose again when the game was restarted, so learning alone could not explain it. Fischbacher, Gächter and Fehr (2001) reported that many people are conditional cooperators who contribute as much as others do, while some always free ride. Cooperation gradually unravels as conditional cooperators cut their contributions in response to free riders.
Punishment and cooperation
Fehr and Gächter (2000) reported that when participants could spend their own money to punish others after each round, many punished free riders and contributions stayed high or even rose. Fehr and Gächter (2002) called such costly punishment of people one would never meet again altruistic punishment and argued that it is an important basis of human cooperation. However, Herrmann, Thöni and Gächter (2008), running experiments in 16 cities, reported that in some societies antisocial punishment of cooperators was common, preventing punishment from raising cooperation. Rand, Greene and Nowak (2012) reported that faster deciders contributed more, arguing that cooperation is intuitive, though later replication studies produced mixed results. The public goods game links the theory of public goods with research on the evolution of cooperation.
FAQ
- What is the public goods game in simple terms?
- Several people put money into a common pot, the pot grows and is shared equally. Everyone gains if all contribute, but each person does better by keeping their money and taking a share of others' contributions, so cooperation is hard.
- How can cooperation be maintained in the public goods game?
- In experiments, giving players a chance to punish free riders often keeps contributions high. In some societies, however, antisocial punishment of cooperators occurs, so the effect of punishment depends on culture and institutions.
Sources reviewed: 2026-10-26
References
- Isaac, R. M., & Walker, J. M. (1988). Group size effects in public goods provision: The voluntary contributions mechanism. Quarterly Journal of Economics, 103(1), 179–199. Group size and marginal return effects — the game's basic structure and variables.
- Andreoni, J. (1988). Why free ride? Strategies and learning in public goods experiments. Journal of Public Economics, 37(3), 291–304. Why contributions decay: learning or strategy? A classic restart experiment.
- Fehr, E., & Gächter, S. (2000). Cooperation and punishment in public goods experiments. American Economic Review, 90(4), 980–994. With punishment, cooperation is sustained — the landmark result.
- Fischbacher, U., Gächter, S., & Fehr, E. (2001). Are people conditionally cooperative? Evidence from a public goods experiment. Economics Letters, 71(3), 397–404. Many people are conditional cooperators — why cooperation unravels.
- Fehr, E., & Gächter, S. (2002). Altruistic punishment in humans. Nature, 415(6868), 137–140. People pay to punish free riders — altruistic punishment and the evolution of cooperation.
- Herrmann, B., Thöni, C., & Gächter, S. (2008). Antisocial punishment across societies. Science, 319(5868), 1362–1367. Antisocial punishment of cooperators varies across 16 cities — culture and institutions matter.
- Rand, D. G., Greene, J. D., & Nowak, M. A. (2012). Spontaneous giving and calculated greed. Nature, 489(7416), 427–430. Faster decisions mean more giving — is cooperation intuitive? (A debated finding.)