Journal of Public Economics 26 (1985) 5 t-74. North-Holland zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQP PUBLIC GOODS PROVISION IN AN EXPERIMENTAL ENVIRONMENT* R. Mark ISAAC University of Arizona, Tucson, AZ 85721, U.S.A. Kenneth F. McCUE and Charles R. PLOTT California Institute of Technology, Pasadena, CA 91125, U.S.A. Received May 1982, revised version received May 1984 1. Introduction The problem of public goods provision has been central to many areas of economics. The traditional economic models, resting on assumptions about nonexcludability and single-period behavior, led directly to a prediction that social decision processes which rely upon voluntary individual payment for the provision of public goods cannot work [see, for example, Feldman (1980)]. According to such models people will not voluntarily pay. Because the profit incentive cannot operate naturally to induce supply in an ordinary market setting, public goods serve as a classic model of market failure and exist as the foundation for many modern theories of government. The central purpose of the experiments we conducted was to explore the behavior of groups within a set of conditions where we expected the traditional model would work with reasonable accuracy. As will be outlined below, our expectations were confirmed. The experiments and procedures we identify thus provide a setting within which public goods are provided at near zero levels and thus constitute a context for the testing of institutions and theories that are proposed as solutions to the public goods problem. Some potential solutions are explored in this paper and the results are also reported. In addition to serving as a background for further experiments, our results unambiguously demonstrate the existence of the under-provision of public goods and related ‘free riding’ phenomenon and thereby discredit the *The substance of this paper was delivered at the Public Choice Society meeting in San Francisco in the spring of 1980. The tiancial support of the National Science Foundation and the Caltech Program for Enterprise and Public Policy is gratefully acknowledged. Professor Plott also wishes to acknow- ledge the support of the Guggenheim Foundation and the Center for Advanced Study in the Behavioral Sciences. 0047-2727/85/$3.30 ci”J 1985, Elsevier Science Publishers B.V. (North-Holland)