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Endogenous Move Structure And Voluntary Provision Of Public Goods: Theory And Experiment

  • Daniele Nosenzo

    (University of Nottingham)

  • Martin Sefton

    ()

    (University of Nottingham)

In this paper we examine voluntary contributions to a public good when the timing of contributions is endogenously determined by contributors, focusing on the simple quasi-linear setting with two players (Varian, 1994). We show that the move order that is predicted to emerge is sensitive to how commitment opportunities are modeled. We show that a favorable move order is predicted to emerge in Hamilton and Slutsky's (1990) "observable delay" extended game, but a detrimental move order is predicted to emerge in their "action commitment" extended game. We then report a laboratory experiment designed to examine whether the predicted move ordering emerges, and how this impacts overall contributions, in these extended games. The results are similar in both extended games. We find that when the detrimental move order is observed, contributions are indeed lower, as predicted. However, this detrimental move order is seldom observed. Instead of committing to low contributions, players tend to avoid making a commitment. These experimental results on timing decisions suggest that commitment opportunities may be less damaging to public good provision than previously thought.

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Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2009-09.

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Date of creation: Apr 2009
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Handle: RePEc:cdx:dpaper:2009-09
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