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Bayesian Nash Equilibria with a Provision Point: An Experimental Test

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Listed:
  • Lowell Johnson

    (Rutgers)

Abstract

This paper extends theory and experimentation in the context of two parties in a group who contribute to a public good with a provision point. This study analyzes the voluntary contributions game in which a public good is provided if and only if the sum of contributions meets or exceeds a threshold. I analyze several Bayesian Nash equilibria in this game and examine their efficiency implications. In an experimental test of a public-goods problem with a threshold and rebate, the observed behavior of the subjects generally was consistent with a linear bidding strategy in which bids increased with realized valuation. Further, the behavior of some subjects was sensitive to changes in the prior distribution of valuations and the relative cost of the public good.

Suggested Citation

  • Lowell Johnson, 1997. "Bayesian Nash Equilibria with a Provision Point: An Experimental Test," Departmental Working Papers 199618, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:199618
    as

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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/1996-18.pdf
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    References listed on IDEAS

    as
    1. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
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    5. Dawes, Robyn M. & Orbell, John M. & Simmons, Randy T. & Van De Kragt, Alphons J. C., 1986. "Organizing Groups for Collective Action," American Political Science Review, Cambridge University Press, vol. 80(4), pages 1171-1185, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bayesian; Bayesian Nash equilibria; contribute; experiment; provision point; public; public good; public goods; threshold; voluntary contribution; voluntary contributions;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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