Social capital and the voluntary provision of public goods

Abstract

Individual contributions to public good investments are subject to the problem of free riding. We investigate the possibility of overcoming the free-riding problem through creating social capital via communication. Using data from a public goods experiment, we empirically test the effectiveness of two commonly used types of communication interventions in various organizations—structured, goal-oriented communication and unstructured, free-form communication—in creating social capital. Although both types of communication are found to reduce free-riding, when players stay in the same groups before and after communication, unstructured communication brings voluntary contributions closer to the efficient level persistently; structured communication is less successful. In contrast, structured communication is more successful when players are allocated to different groups after communication; unstructured communication has a smaller impact on voluntary contributions in this case.