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The Private Provision of Public Goods under Uncertainty: A Symmetric‐Equilibrium Approach

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  • DONALD C. KEENAN
  • ILTAE KIM
  • RONALD S. WARREN

Abstract

Various studies have examined whether increased uncertainty about the non‐Nash response of others to an individual's voluntary contribution to a public good affects that individual's contribution so as to mitigate the free‐rider problem. We extend this single‐agent approach to the analysis of a symmetric equilibrium. We provide conditions on group size and endogenous relative risk aversion that imply increased equilibrium contributions in response to greater uncertainty about the productivity of each individual's contribution to the actual level of the public good. These results enable us to broaden the circumstances in which the theory predicts that increased uncertainty reduces free riding.

Suggested Citation

  • Donald C. Keenan & Iltae Kim & Ronald S. Warren, 2006. "The Private Provision of Public Goods under Uncertainty: A Symmetric‐Equilibrium Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(5), pages 863-873, December.
    • Handle: RePEc:bla:jpbect:v:8:y:2006:i:5:p:863-873
    DOI: 10.1111/j.1467-9779.2006.00292.x
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    References listed on IDEAS

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    1. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
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    Cited by:

    1. Elyès Jouini & Clotilde Napp & Diego Nocetti, 2013. "Economic consequences of Nth-degree risk increases and Nth-degree risk attitudes," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 199-224, October.
    2. Anwesha Banerjee & Stefano Barbieri & Kai A. Konrad, 2022. "Climate Policy, Irreversibilities and Global Economic Shocks," Working Papers tax-mpg-rps-2022-11, Max Planck Institute for Tax Law and Public Finance.
    3. Shlomit Hon‐Snir & Benyamin Shitovitz & Menahem Spiegel, 2010. "Bayesian Equilibrium in a Public Good Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 387-398, April.
    4. Fan-chin Kung & Haiyong Liu, 2019. "Underinsurance Caused by Uninsurable Losses in the Public Goods and Personal Assets," Review of Economics & Finance, Better Advances Press, Canada, vol. 15, pages 14-22, February.
    5. repec:dau:papers:123456789/12392 is not listed on IDEAS
    6. Billette de Villemeur, Etienne & Cea-Echenique, Sebastián & Cuevas, Conrado, 2022. "Revisiting the impact of uncertainty in the private provision of public goods," MPRA Paper 114888, University Library of Munich, Germany.
    7. Matteo M. Marini & Aurora García-Gallego & Luca Corazzini, 2018. "Communication in a threshold public goods game with ambiguity: Anomalies and regularities," Working Papers 2018/03, Economics Department, Universitat Jaume I, Castellón (Spain).
    8. repec:dau:papers:123456789/11094 is not listed on IDEAS
    9. Nocetti, Diego & Smith, William T., 2015. "Changes in risk and strategic interaction," Journal of Mathematical Economics, Elsevier, vol. 56(C), pages 37-46.

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