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On sequential and simultaneous contributions under incomplete information

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  • Parimal Bag

    ()

  • Santanu Roy

    ()

Abstract

Under incomplete information about (independent) private valuations of a public good, we establish sufficient conditions under which, despite the incentive to free ride on future contributors, the expected total amount of voluntary contributions is higher when agents contribute sequentially (observing prior contributions) rather than simultaneously. We establish this in a conventional framework with quasi-linear utility where agents care only about the total provision of the public good (rather than individual contribution levels) and there is no non-convexity in provision of the public good. We allow for arbitrary number of agents and fairly general distribution of types.

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Bibliographic Info

Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 40 (2011)
Issue (Month): 1 (February)
Pages: 119-145

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Handle: RePEc:spr:jogath:v:40:y:2011:i:1:p:119-145

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Related research

Keywords: Fundraising; Sequential vs. simultaneous contributions; Public goods; Incomplete information; D73; H41; L44;

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References

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  1. Leslie M. Marx & Steven A. Matthews, 1997. "Dynamic Voluntary Contribution to a Public Project," Discussion Papers 1188, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Coats, Jennifer C. & Gronberg, Timothy J. & Grosskopf, Brit, 2009. "Simultaneous versus sequential public good provision and the role of refunds -- An experimental study," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 326-335, February.
  3. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  4. Bagwell, Kyle, 1995. "Commitment and observability in games," Games and Economic Behavior, Elsevier, vol. 8(2), pages 271-280.
  5. ParimalKanti Bag & Santanu Roy, 2008. "Repeated Charitable Contributions under Incomplete Information," Economic Journal, Royal Economic Society, vol. 118(525), pages 60-91, 01.
  6. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  7. Agastya, Murali & Menezes, Flavio & Sengupta, Kunal, 2007. "Cheap talk, efficiency and egalitarian cost sharing in joint projects," Games and Economic Behavior, Elsevier, vol. 60(1), pages 1-19, July.
  8. Potters, Jan & Sefton, Martin & Vesterlund, Lise, 2005. "After you--endogenous sequencing in voluntary contribution games," Journal of Public Economics, Elsevier, vol. 89(8), pages 1399-1419, August.
  9. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
  10. James Bessen & Eric Maskin, 2006. "Sequential Innovation, Patents, and Imitation," Economics Working Papers 0025, Institute for Advanced Study, School of Social Science.
  11. Menezes, Flavio M. & Monteiro, Paulo K. & Temimi, Akram, 2001. "Private provision of discrete public goods with incomplete information," Journal of Mathematical Economics, Elsevier, vol. 35(4), pages 493-514, July.
  12. Palfrey, Thomas R. & Rosenthal, Howard, 1988. "Private incentives in social dilemmas : The effects of incomplete information and altruism," Journal of Public Economics, Elsevier, vol. 35(3), pages 309-332, April.
  13. Gradstein, Mark, 1992. "Time Dynamics and Incomplete Information in the Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 581-97, June.
  14. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
  15. Fershtman, C. & Nitzan, S., 1988. "Dynamic Voluntary Provision Of Public Goods," Papers 21-88, Tel Aviv.
  16. Cremer, Jacques, & Riordan, Michael H, 1985. "A Sequential Solution to the Public Goods Problem," Econometrica, Econometric Society, vol. 53(1), pages 77-84, January.
  17. Neil Bruce, 1989. "Defence Expenditures by Countries in Allied and Adversarial Relationships," Working Papers 745, Queen's University, Department of Economics.
  18. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 583-601, October.
  19. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
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Citations

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Cited by:
  1. Giuseppe Russo & Luigi Senatore, 2011. "A Note on Contribution Games with Loss Functions," CSEF Working Papers 302, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. Giorgio Ferrari & Frank Riedel & Jan-Henrik Steg, 2013. "Continuous-Time Public Good Contribution under Uncertainty," Papers 1307.2849, arXiv.org.
  3. Senatore, L, 2011. "Public Good Provision with Convex Costs," MPRA Paper 36984, University Library of Munich, Germany.

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