Asset Markets And Equilibrium Selection In Public Goods Games With Provision Points: An Experimental Study
AbstractIn this paper we report some experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and efficiency. A control treatment reveals that, as in the experimental literature for similar environments, subjects' behavior converges to the inefficient outcome whenever they are endowed with the right to play the game. However, auctioning off such a right among a larger population of players has a significant efficiency-enhancing effect. Once the Pareto-dominant equilibrium in the second stage is reached, the auction price at the first stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. The full contribution equilibrium was extremely robust: individual subjects' deviations from the equilibrium strategy were not able to force lower market prices and did not affect provision of the public good in subsequent periods.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2001-29.
Length: 1 pages
Date of creation: Nov 2001
Date of revision:
Publication status: Published by Ivie
Public Goods; Provision Points; Experimental Markets.;
Other versions of this item:
- Bruno Broseta & Enrique Fatas & Tibor Neugebauer, 2003. "Asset Markets and Equilibrium Selection in Public Goods Games with Provision Points: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 574-591, October.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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