Free Riders Do not Like Uncertainty
AbstractWe examine the effect of introducing Knightian uncertainty into a simple model of public good provision. We find that uncertainty may reduce the free-rider problem if utility is concave in public goods or there are decreasing returns to scale in the production of public goods. It is possible that free-riding may be less in a large society. We argue that our results are compatible with the experimental evidence.
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Bibliographic InfoPaper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 96-14.
Length: 35 pages
Date of creation: 1996
Date of revision:
UNCERTAINTY; RISK; PUBLIC GOODS;
Other versions of this item:
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- H40 - Public Economics - - Publicly Provided Goods - - - General
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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- Eichberger, J. & Kelsey, D., 1996.
"E-Capacities and the Ellsberg Paradox,"
96-13, Department of Economics, University of Birmingham.
- Dickinson, David L., 1998. "The voluntary contributions mechanism with uncertain group payoffs," Journal of Economic Behavior & Organization, Elsevier, vol. 35(4), pages 517-533, May.
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