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The Dynamic Free Rider Problem: A Laboratory Study

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  • Marco Battaglini
  • Salvatore Nunnari
  • Thomas R. Palfrey

Abstract

We report the results of an experiment that investigates free riding in the accumulation of durable public goods. We consider economies with reversibility, where contributions can be positive or negative; and economies with irreversibility, where contributions are nonnegative. Aggregate outcomes support the qualitative predictions of the Markov Perfect Equilibria (MPE) characterized in Battaglini, Nunnari, and Palfrey (2014): steady state levels of public good are lower with reversibility than irreversibility; accumulation is inefficiently slow; and the public good is under-provided in both regimes. On the other hand, public good levels are higher than MPE, and some evidence of history dependence is detected.

Suggested Citation

  • Marco Battaglini & Salvatore Nunnari & Thomas R. Palfrey, 2016. "The Dynamic Free Rider Problem: A Laboratory Study," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 268-308, November.
    • Handle: RePEc:aea:aejmic:v:8:y:2016:i:4:p:268-308
    Note: DOI: 10.1257/mic.20150126
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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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