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On Sequential and Simultaneous Contributions under Incomplete Information

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  • Parimal Bag

    ()
    (National University of Singapore, Singapore.)

  • Santanu Roy

    ()
    (Southern Methodist University, Dallas, Texas.)

Abstract

Under incomplete information about (independent) private valuations of a public good, we establish sufficient conditions under which, despite the incentive to free ride on future contributors, the expected total amount of voluntary contributions is higher when agents contribute sequentially (observing prior contributions) rather than simultaneously. We establish this in a conventional framework with quasi-linear utility where agents care only about the total provision of the public good (rather than individual contribution levels) and there is no non-convexity in provision of the public good. We allow for arbitrary number of agents and fairly general distribution of types.

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File URL: ftp://ftp1.economics.smu.edu/WorkingPapers/2008/SROY/SROY-2008-08-rev-2008-11.pdf
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Bibliographic Info

Paper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0805.

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Date of creation: Aug 2008
Date of revision: Nov 2008
Handle: RePEc:smu:ecowpa:0805

Contact details of provider:
Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
Phone: 214-768-2715
Fax: 214-768-1821
Web page: http://www.smu.edu/economics

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Keywords: Contribution games; public good; incomplete information.;

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References

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  1. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  2. Coats, Jennifer C. & Gronberg, Timothy J. & Grosskopf, Brit, 2009. "Simultaneous versus sequential public good provision and the role of refunds -- An experimental study," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 326-335, February.
  3. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
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  5. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 583-601, October.
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  8. Potters, J.J.M. & Sefton, M. & Vesterlund, L., 2003. "After You - Endogenous Sequencing in Voluntary Contribution Games," Discussion Paper 2003-98, Tilburg University, Center for Economic Research.
  9. Fershtman, C. & Nitzan, S., 1988. "Dynamic Voluntary Provision Of Public Goods," Papers 21-88, Tel Aviv.
  10. ParimalKanti Bag & Santanu Roy, 2008. "Repeated Charitable Contributions under Incomplete Information," Economic Journal, Royal Economic Society, vol. 118(525), pages 60-91, 01.
  11. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
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  13. Menezes, Flavio M. & Monteiro, Paulo K. & Temimi, Akram, 2001. "Private provision of discrete public goods with incomplete information," Journal of Mathematical Economics, Elsevier, vol. 35(4), pages 493-514, July.
  14. James Bessen & Eric Maskin, 2006. "Sequential Innovation, Patents, and Imitation," Economics Working Papers 0025, Institute for Advanced Study, School of Social Science.
  15. Eyal Winter, 2006. "Optimal incentives for sequential production processes," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 376-390, 06.
  16. Leslie M. Marx & Steven A. Matthews, . "Dynamic Voluntary Contribution to a Public Project," Penn CARESS Working Papers 6f8dbf67d492ff8a10975496b, Penn Economics Department.
  17. Agastya, Murali & Menezes, Flavio & Sengupta, Kunal, 2007. "Cheap talk, efficiency and egalitarian cost sharing in joint projects," Games and Economic Behavior, Elsevier, vol. 60(1), pages 1-19, July.
  18. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
  19. Gradstein, Mark, 1992. "Time Dynamics and Incomplete Information in the Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 581-97, June.
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Citations

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Cited by:
  1. Senatore, L, 2011. "Public Good Provision with Convex Costs," MPRA Paper 36984, University Library of Munich, Germany.
  2. Russo, Giuseppe & Senatore, Luigi, 2011. "A Note on Contribution Games with Loss Functions," MPRA Paper 33423, University Library of Munich, Germany.
  3. Murat Yilmaz, 2010. "Auctioning a Discrete Public Good under Incomplete Information," Working Papers 2010/14, Bogazici University, Department of Economics.
  4. Giorgio Ferrari & Jan-Henrik Steg & Frank Riedel, 2013. "Continuous-Time Public Good Contribution under Uncertainty," Working Papers 485, Bielefeld University, Center for Mathematical Economics.

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