11. Institutions Fostering Public Goods Provision

“Never do an experiment on public good provision or the ultimatum game!” This advice was given by a senior colleague to a young mathematician (BR) joining the Selten group at the Bonn Laboratory in the late 1980s. A well-meant advice to someone entering the field of experimental economics, grounded in the colleague’s observation that simple games, like ultimatum, dictator or prisoners’ dilemma games have already been subject to numerous experimental studies and that more complicated settings are non-tractable. For hand-run experiments the degree of complexity seemed very restricted and computerized experiments faced serious technical limitations at that time. Today, more than 20 years later, we can look back to numerous intriguing new insights that have been gained through additional public-goods and ultimatum experiments. Some of them will be reviewed in this paper and some of them are co-authored by the formerly young mathematician who did not follow the advice of the senior colleague. Undisputable, technical progress has enriched our possibilities for handling richer and more complex games and experimental settings. This, however, is at best a necessary requirement.