Too much information? An experiment on communication and cooperation

- Individuals face uncertainty about returns to contributing to public goods.
- What is the best way to communicate such information?
- Coarse information is theoretically preferred, but this depends on how people react.
- In a lab experiment, coarse information is sometimes worse.
- Information providers adjust accordingly.

There are many situations where an informed third-party agent communicates information about the value of a public good or group project to contributors. One example is the information provided by charity ratings organizations. I ask how information about the quality of a public good should be communicated in order to minimize free-riding. I propose that coarse or pooled messages about the quality of the public good can increase contributions and, in turn, social welfare. If individuals cannot distinguish between a public good that they would like to contribute to and a public good that would otherwise suffer from a high degree of free-riding, contributions to the latter may approach the efficient level of provision. Experimental results suggest that, in practice, some participants are averse to giving without having complete information and - as a result - coarse messages may decrease welfare.