Getting the Ball Rolling: Voluntary Contributions to a Long-Term Public Project
I consider an incomplete information model of voluntary contributions to a long term public project. While agents can observe the progress of the project and their own costs of contribution, they have incomplete information about the contribution costs of others. I show that the equilibrium pattern of contributions is influenced by the interplay of two opposing incentives: First, agents prefer to free ride on others for contributions. However, second, agents also wish to encourage each other to contribute by increasing their own contributions. Main findings of the paper include: (1) Agents make concessions toward the completion of the project by increasing their contributions as the project moves forward. (2) As additional agents join the group, existing agents increase their contributions in some states and reduce them in others. In particular, agents increase their contributions in the initial stages of the project to increase its value to others and secure their future contributions as a result. (3) Despite this nonmonotonicity, agents do strictly benefit from the presence of additional agents. (4) The project progresses too slowly from the social standpoint.
|Date of creation:||2002|
|Contact details of provider:|| Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097|
Phone: (919) 660-1800
Fax: (919) 684-8974
Web page: http://econ.duke.edu/
When requesting a correction, please mention this item's handle: RePEc:duk:dukeec:02-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics Webmaster)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.