Multiple Choice

In an experiment, groups of four people are each given a new $20 endowment for ten consecutive rounds. In each round, they can secretly contribute any amount of their endowment to a common pool. For every dollar in the pool, each of the four players (including those who didn't contribute) receives $0.40. After each round, all members are informed of how much the other three contributed. Experiments consistently show two patterns: (1) In the first round, average contributions are significantly greater than zero. (2) Across the subsequent nine rounds, the average contribution level steadily falls. Which of the following best analyzes the relationship between these two observed patterns?

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Updated 2025-07-28

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