Voluntary Contribution to Multiple Public Projects
AbstractThe problem of financing a set of public goods (facilities, projects) by private contri- butions is studied. The corresponding cooperative game, the realization game, is shown to be convex. For the noncooperative setting we study a realization scheme that induces a strategic game. This contribution game is shown to be best-response equivalent with a coordination game in which the payoff to all players is the utilitarian collective welfare function, i.e., the sum of the utility functions of the players. Several equilibrium proper- ties are derived: no money is wasted in an equilibrium; a player whose necessary projects are not all realized does not contribute. Strategy profiles maximizing utilitarian welfare are strong Nash equilibria of the contribution game. Each strong Nash equilibrium corre- sponds to a core element of the realization game in a natural way. It is shown that there is a one-to-one correspondence between the set of strong Nash equilibria of the contribution game and the largest set of core elements of the realization game, that is consistent with maximizing the number of players with non-zero payoffs. It is precisely the subset of the core according to which rewards zero indicate null players
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-88.
Date of creation: 1999
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public goods; cooperative games; coordination games; potential games; utili- tarian welfare function;
Other versions of this item:
- M. Koster & H. Reijnierse & M. Voorneveld, 2003. "Voluntary Contributions to Multiple Public Projects," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(1), pages 25-50, 01.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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- Voorneveld, M. & Norde, H.W., 1997.
"A characterisation of ordinal potential games,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-74020, Tilburg University.
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"The cutting power of preparation,"
Working Paper Series in Economics and Finance
583, Stockholm School of Economics.
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- Kuipers, Jeroen & Mosquera, Manuel A. & Zarzuelo, José M., 2013. "Sharing costs in highways: A game theoretic approach," European Journal of Operational Research, Elsevier, vol. 228(1), pages 158-168.
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