We present an experiment on information defaults and information seeking in a repeated public goods provision setting. In our experiment the default is one either with or without information about others’ contributions, and having information comes either at a financial cost or at a financial benefit. Subjects mostly follow the money in deciding whether to have the information or not, but around a third seek or stick to information even when this is costly. However, a default of not having information about the others’ contributions leads to a slower unraveling of cooperation, whether or not the information is financially costly or beneficial. This slower unraveling is explained by the dynamic of beliefs about others’ contributions in these treatments. A secondary informational default effect appears to take place. When the default is no information, subjects do not seek information more but, conditional on taking into account financial incentives, they tend to believe that more other subjects seek information.
We experimentally study the disincentive effect of taxing work and redistributing tax revenues per capita when redistribution is imposed vs. democratically chosen in a vote. We find that the disincentive effect is significantly smaller when redistribution is chosen in a vote than when it is imposed. That is, we find an endogeneity effect in the sense that the efficiency cost is smaller when redistribution is chosen in a vote. The reason is that redistribution is seen as more legitimate, and hence less demotivating, when accepted in a vote. That is, we show there is a causal “dividend of democracy”.