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Dynamic Voluntary Contribution to a Public Project

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  • Leslie M. Marx
  • Steven A. Matthews

Abstract

We consider the dynamic private provision of funds to a project that generates a flow of public benefits. Examples include fund drives for public television or university buildings. The games we study have complete information about payoffs, allow each player to contribute each period, and let each player observe only the aggregate of the other players' past contributions. The symmetric Nash equilibrium outcomes are characterized and shown to be also perfect Bayesian equilibrium outcomes. If the number of periods in which contributions are accepted is large enough, and the players are patient or the period length is short enough, equilibria exist in which the project is eventually or asymptotically completed. Some equilibria with these features are Markov perfect. In some, the time to completion shrinks to zero with the period length--free riding vanishes in the limit. These results are in contrast to those of other models in which allowing repetitive contributions worsens the free riding problem.
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  • Leslie M. Marx & Steven A. Matthews, "undated". "Dynamic Voluntary Contribution to a Public Project," Penn CARESS Working Papers 6f8dbf67d492ff8a10975496b, Penn Economics Department.
  • Handle: RePEc:cla:penntw:6f8dbf67d492ff8a10975496b3a2d69d
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    1. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
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    11. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 583-601.
    12. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
    13. Dorsey, Robert E, 1992. "The Voluntary Contributions Mechanism with Real Time Revisions," Public Choice, Springer, vol. 73(3), pages 261-282, April.
    14. Wirl, Franz, 1996. "Dynamic voluntary provision of public goods: Extension to nonlinear strategies," European Journal of Political Economy, Elsevier, vol. 12(3), pages 555-560, November.
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