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After You - Endogenous Sequencing in Voluntary Contribution Games

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Author Info

  • Potters, J.J.M.
  • Sefton, M.
  • Vesterlund, L.

    (Tilburg University, Center for Economic Research)

Abstract

We examine contributions to a public good when some donors do not know the true value of the good.If donors in such an environment determine the sequence of moves, two contribution orders may arise as equilibria.Either the uninformed and informed donors contribute simultaneously or the informed contribute prior to the uninformed.Sequential moves result in a larger provision of the public good, because the follower mimics the action of the leader, and in accounting for this response the leader chooses to contribute when it is efficient to do so.An experimental investigation of the game shows that the donors predominantly choose to contribute sequentially, and that the resulting contributions are larger than those of the simultaneous-move game.Although the gain from sequential moves is smaller when the sequence is set exogenously, our results suggest that the involved parties would benefit from having sequential moves imposed upon them.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2003-98.

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Date of creation: 2003
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Handle: RePEc:dgr:kubcen:200398

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Web page: http://center.uvt.nl

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Keywords: information; uncertainty; public goods; games;

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  1. Leslie M. Marx & Steven A. Matthews, . ""Dynamic Voluntary Contribution to a Public Project''," CARESS Working Papres 99-01, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  2. Cooper, David J., 2008. "Learning in Entry Limit Pricing Games," Handbook of Experimental Economics Results, Elsevier.
  3. Bac, Mehmet & Bag, Parimal Kanti, 2003. "Strategic information revelation in fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 659-679, March.
  4. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
  5. Moxnes, E. & Heijden, E.C.M. van der, 2000. "The Effect of Leadership in a Public Bad Experiment," Discussion Paper 2000-102, Tilburg University, Center for Economic Research.
  6. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2002. "To Commit or Not to Commit: Endogenous Timing in Experimental Duopoly Markets," Games and Economic Behavior, Elsevier, vol. 38(2), pages 240-264, February.
  7. Cadsby, Charles Bram & Frank, Murray & Maksimovic, Vojislav, 1998. "Equilibrium Dominance in Experimental Financial Markets," Review of Financial Studies, Society for Financial Studies, vol. 11(1), pages 189-232.
  8. Cooper, David J & Garvin, Susan & Kagel, John H, 1997. "Adaptive Learning vs. Equilibrium Refinements in an Entry Limit Pricing Game," Economic Journal, Royal Economic Society, vol. 107(442), pages 553-75, May.
  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. Cagri S. Kumru & Lise Vesterlund, 2010. "The Effect of Status on Charitable Giving," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(4), pages 709-735, 08.
  11. Potters, J.J.M. & Sefton, M. & Vesterlund, L., 2001. "Why Announce Leadership Contributions? An Experimental Study of the Signaling and Reciprocity Hypotheses," Discussion Paper 2001-100, Tilburg University, Center for Economic Research.
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