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A Note on Contribution Games with Loss Functions

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Decisions on joint funding of continuous public goods between two agents often involve heterogeneous targets. We introduce loss functions in a contribution game in order to study the effect of this conflict. Unlike Varian (1994), joint contribution occurs only if the players’ targets are sufficiently close and the sequential game reduces free riding problems, while total contribution is higher in the simultaneous game.

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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 302.

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Date of creation: 20 Dec 2011
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Handle: RePEc:sef:csefwp:302

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Keywords: Public Goods; Intergovernmental Relations;

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References

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  1. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
  2. Simon Gaechter & Daniele Nosenzo & Elke Renner & Martin Sefton, 2009. "Sequential versus simultaneous contributions to public goods: Experimental evidence," Discussion Papers 2009-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
  4. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
  5. Buchhilz, W. & Konrad, K.A. & Lommerund, K.E., 1997. "Stackelberg Leadership and Transfers in Private Provision of Public Goods," Norway; Department of Economics, University of Bergen 170, Department of Economics, University of Bergen.
  6. Josef Falkinger & Ernst Fehr & Simon Gaechter, . "A Simple Mechanism for the Efficient Provision of Public Goods - Experimental Evidence," IEW - Working Papers 003, Institute for Empirical Research in Economics - University of Zurich.
  7. Parimal Bag & Santanu Roy, 2011. "On sequential and simultaneous contributions under incomplete information," International Journal of Game Theory, Springer, vol. 40(1), pages 119-145, February.
  8. James Andreoni, 1998. "Toward a Theory of Charitable Fund-Raising," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1186-1213, December.
  9. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-98, September.
  10. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
  11. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  12. Gächter, Simon & Nosenzo, Daniele & Renner, Elke & Sefton, Martin, 2010. "Sequential vs. simultaneous contributions to public goods: Experimental evidence," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 515-522, August.
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Cited by:
  1. Giuseppe Russo & Luigi Senatore, 2012. "Who Contributes? A Strategic Approach to a European Immigration Policy," CSEF Working Papers 306, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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