Public‐good games and the Balinese

Abstract

Purpose The Balinese have been successful for centuries in sustaining cooperation among the members of local communities in order to provide public goods through individual contributions. The purpose of this paper is to review and highlight the Balinese mechanism's remarkable features. Design/methodology/approach The paper surveyed the experimental literature on public goods and highlighted those features of the Balinese tradition that have been proven to be both effective in the experimental laboratory and successful in deterring free‐riding on the field. Findings The most prominent features discussed are decentralization, democratic decision making, the use of two currencies, supervision, and the possibility of imposing severe sanctions for free‐riding. Social implications The paper's findings not only can help to preserve the high level of cooperation among inhabitants in Bali threatened by migration flows and the increasingly intense reliance on the market mechanism, but they also provide general insights both for theoreticians and practitioners on how to create successful communities. In addition, the literature review sheds light on several features of public‐good games that have not been satisfactorily explored yet by experimental economists. Originality/value The novelty of the paper's approach lies in looking at the Balinese tradition through the glasses of mechanism design theory and aligning the related findings of experimental economics in order to understand its success and problems.

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