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Achieving Efficiency in Dynamic Contribution Games

Author

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  • Jakša Cvitanić
  • George Georgiadis

Abstract

We analyze a game in which a group of agents exerts costly effort over time to make progress on a project. The project is completed once the cumulative effort reaches a prespecified threshold, at which point it generates a lump-sum payoff. We characterize a budget-balanced mechanism that induces each agent to exert the first-best effort level as the outcome of a Markov perfect equilibrium, thus eliminating the free-rider problem. We also show how our mechanism can be adapted to other dynamic games with externalities, such as strategic experimentation and the dynamic extraction of a common resource.

Suggested Citation

  • Jakša Cvitanić & George Georgiadis, 2016. "Achieving Efficiency in Dynamic Contribution Games," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 309-342, November.
    • Handle: RePEc:aea:aejmic:v:8:y:2016:i:4:p:309-42
    Note: DOI: 10.1257/mic.20160018
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    References listed on IDEAS

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    Cited by:

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    2. Niko Jaakkola & Florian Wagener, 2020. "All symmetric equilibria in differential games with public goods," Tinbergen Institute Discussion Papers 20-020/II, Tinbergen Institute.
    3. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    4. Fabbri, Giorgio & Faggian, Silvia & Freni, Giuseppe, 2024. "On competition for spatially distributed resources in networks," Theoretical Economics, Econometric Society, vol. 19(2), May.
    5. Georgiadis, George, 2017. "Deadlines and infrequent monitoring in the dynamic provision of public goods," Journal of Public Economics, Elsevier, vol. 152(C), pages 1-12.
    6. Tajika, Tomoya, 2020. "Contribute once! Full efficiency in a dynamic contribution game," Games and Economic Behavior, Elsevier, vol. 123(C), pages 228-239.
    7. Boyan Jovanovic & Sai Ma, 2023. "Growth through learning," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 50, pages 211-234, October.
    8. Sebastien Rouillon, 2018. "Noncooperative Dynamic Contribution to a Public Project," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-24, September.
    9. Xiang Yu & Yuchong Zhang & Zhou Zhou, 2020. "Teamwise Mean Field Competitions," Papers 2006.14472, arXiv.org, revised May 2021.
    10. Brendan Daley & Ruoyu Wang, 2018. "When to Release Feedback in a Dynamic Tournament," Decision Analysis, INFORMS, vol. 15(1), pages 11-26, March.

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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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