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On the Provision of Public Goods with Probabilistic and Ambiguous Thresholds

Listed author(s):
  • Astrid Dannenberg

    ()

  • Andreas Löschel

    ()

  • Gabriele Paolacci

    ()

  • Christiane Reif

    ()

  • Alessandro Tavoni

    ()

Many natural systems involve thresholds that, once triggered, imply irreversible damages for the users. Although the existence of such thresholds is undisputed, their location is highly uncertain. We explore experimentally how threshold uncertainty affects collective action in a series of threshold public goods games. Whereas the public good is always provided when the exact value of the threshold is known, threshold uncertainty is generally detrimental for the public good provision as contributions become more erratic. The negative effect of threshold uncertainty is particularly severe when it takes the form of ambiguity, i.e. when players are not only unaware of the value of the threshold, but also of its probability distribution. Early and credible commitment helps groups to cope with uncertainty. Copyright Springer Science+Business Media Dordrecht 2015

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File URL: http://hdl.handle.net/10.1007/s10640-014-9796-6
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Article provided by Springer & European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 61 (2015)
Issue (Month): 3 (July)
Pages: 365-383

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Handle: RePEc:kap:enreec:v:61:y:2015:i:3:p:365-383
DOI: 10.1007/s10640-014-9796-6
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