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Conjectural Variations and Voluntary Public Good Provision in a Repeated Game Setting

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  • Jun–ichi Itaya
  • Makoto Okamura

Abstract

The purpose of this paper is to show how conjectural variations can be derived as a reduced form in an infinitely repeated game of private provision of public goods. We obtain explicit closed forms of conjectural variations associated with maximal sustainable equilibria in which the sum of the utilities of all of a community's members is maximized for both quadratic and Cobb–Douglas preferences, provided that the resulting sequence of contributions can be sustained as a Nash (or subgame perfect) equilibrium in the underlying repeated game. We also show that positive conjectural variations will emerge as long as people place positive weight on the future, and that those conjectures are positively related to the discount factor.

Suggested Citation

  • Jun–ichi Itaya & Makoto Okamura, 2003. "Conjectural Variations and Voluntary Public Good Provision in a Repeated Game Setting," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(1), pages 51-66, January.
    • Handle: RePEc:bla:jpbect:v:5:y:2003:i:1:p:51-66
    DOI: 10.1111/1467-9779.00121
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    References listed on IDEAS

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    3. Luis Orea & Jevgenijs Steinbuks, 2018. "Estimating Market Power In Homogenous Product Markets Using A Composed Error Model: Application To The California Electricity Market," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1296-1321, April.
    4. Keisuke Kawachi & Hikaru Ogawa, 2006. "Further Analysis on Public-Good Provision in a Repeated-Game Setting," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 339-352, September.
    5. Alex Possajennikov, 2016. "Evolution of Consistent Conjectures in Semi-Aggregative Representation of Games, with Applications to Public Good Games and Contests," Discussion Papers 2016-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Shaffer, Sherrill & Shogren, Jason F., 2009. "Repeated contests: A general parameterization," Economics Letters, Elsevier, vol. 105(2), pages 159-161, November.
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    9. Wolfgang Buchholz & Todd Sandler, 2017. "Successful Leadership in Global Public Good Provision: Incorporating Behavioural Approaches," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 591-607, July.

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