On the probability of breakdown in participation games
In this paper I analyze a participation game i.e. a public good game where contributions to the public good are binary (people either participate or not participate). Although variants of this game have been studied extensively, most previous work takes the beneﬁt of provision of the public good to be independent of the number of players that contribute and show that the probability of breakdown, i.e. the probability that no one participates, is increasing in group size. Here this assumption is dropped. I show when the probability of breakdown is decreasing in group size and also present sufficient conditions under which the probability of breakdown is increasing in group size. Moreover I show that for large groups this probability is non-negligible and exceeding exp(−1) in the limit and that the expected number of participants is less than one. Also two economic examples, concerning R&D and debt overhang, are discussed.
|Date of creation:||2007|
|Date of revision:|
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"Participation Games: Market Entry, Coordination and the Beautiful Blonde,"
CEPR Discussion Papers
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