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Revenue Equivalence of the Volunteer’s Dilemma and the Stag Hunt Game and Inferiority of Intermediate Thresholds

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  • Friedel Bolle

    ()
    (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

Abstract

The launch of a public project requires “enough” support from a group of n players. If players have only binary decision sets (participate or not, vote approvingly or not) this game is called a Binary Threshold Public Goods game (BTPG). In this paper we keep the individual cost/benefit ratios of all players constant and vary only the (rather generally defined) threshold. The revenues of the various BTPG equilibria are compared. Applying two principles of equilibrium selection, the least and the most demanding threshold, namely “one supporting player is sufficient” (Volunteer’s Dilemma) and “support by all players is necessary” (Stag Hunt game) are revenue equivalent for all players. Compared with the Stag Hunt game, all intermediate thresholds are connected with Pareto-inferior revenues.

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Bibliographic Info

Paper provided by RECAP15, European University Viadrina, Frankfurt (Oder) in its series Discussion Paper Series RECAP15 with number 13.

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Length: 9 pages
Date of creation: Jun 2014
Date of revision:
Handle: RePEc:euv:dpaper:13

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Keywords: Threshold Public Goods; binary decisions; mixed strategy equilibria;

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  1. Ondrej Rydval & Andreas Ortmann, 2004. "Loss avoidance as selection principle: evidence from simple stag-hunt games," CERGE-EI Working Papers wp245, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Battalio, Raymond & Samuelson, Larry & Van Huyck, John, 2001. "Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games," Econometrica, Econometric Society, Econometric Society, vol. 69(3), pages 749-64, May.
  3. John B Van Huyck & Raymond C Battalio & Richard O Beil, 1997. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 1225, David K. Levine.
  4. Diekmann, Andreas, 1993. "Cooperation in an Asymmetric Volunteer's Dilemma Game: Theory and Experimental Evidence," International Journal of Game Theory, Springer, Springer, vol. 22(1), pages 75-85.
  5. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
  6. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 56(4), pages 583-601, October.
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