The consequences of a refund in threshold public good games

•We question whether refunds increase efficiency in threshold public good games.•New experimental evidence is provided on the importance of endowment size.•Efficiency increases if and only if the endowment is small relative to threshold.•We provide a novel approach to analyze when a refund is efficiency enhancing.•Efficiency increases when zero contributions are likely in the absence of refund.

We revisit the question of whether a refund increases efficiency in threshold public good games. New experimental evidence is presented on the effect of endowment size. We demonstrate that a refund increases efficiency if and only if the endowment is small relative to the threshold. We also propose a novel way to analyze the effect of a refund. Specifically, we argue that a refund increases efficiency only if significantly many groups converge towards zero contributions in the absence of a refund.