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Simultaneous and sequential contributions to step-level public goods: One vs. two provision levels

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  • Normann, Hans-Theo
  • Rau, Holger A.

Abstract

In a step-level public-good experiment, we investigate how the order of moves (simultaneous vs. sequential) and the number of step levels (one vs. two) affects public-good provision in a two-player game. We find that the sequential order of moves significantly improves public-good provision and payoffs, even though second movers often punish first movers who give less than half of the threshold contribution. The additional second step level - which is not feasible in standard Nash equilibrium - leads to higher contributions but does not improve public-good provision and lowers payoffs. We calibrate the parameters of Fehr and Schmidt's (1999) model of inequality aversion to make quantitative predictions. We find that actual behavior fits remarkably well with several predictions in a quantitative sense.

Suggested Citation

  • Normann, Hans-Theo & Rau, Holger A., 2014. "Simultaneous and sequential contributions to step-level public goods: One vs. two provision levels," DICE Discussion Papers 135, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:135
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    Cited by:

    1. Jörg Spiller & Friedel Bolle, 2017. "Experimental investigations of coordination games: high success rates, invariant behavior, and surprising dynamics," Discussion Paper Series RECAP15 28, RECAP15, European University Viadrina, Frankfurt (Oder).
    2. Spiller, Jörg & Bolle, Friedel, 2017. "Experimental investigations of binary threshold public good games," Discussion Papers 393, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.

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    More about this item

    Keywords

    experimental economics; fund raising; provision-point public good; sequential play; threshold public good;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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