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Revenue Equivalence of the Volunteer’s Dilemma and the Stag Hunt Game and Inferiority of Intermediate Thresholds

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  • Friedel Bolle

    () (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

Abstract

The launch of a public project requires “enough” support from a group of n players. If players have only binary decision sets (participate or not, vote approvingly or not) this game is called a Binary Threshold Public Goods game (BTPG). In this paper we keep the individual cost/benefit ratios of all players constant and vary only the (rather generally defined) threshold. The revenues of the various BTPG equilibria are compared. Applying two principles of equilibrium selection, the least and the most demanding threshold, namely “one supporting player is sufficient” (Volunteer’s Dilemma) and “support by all players is necessary” (Stag Hunt game) are revenue equivalent for all players. Compared with the Stag Hunt game, all intermediate thresholds are connected with Pareto-inferior revenues.

Suggested Citation

  • Friedel Bolle, 2014. "Revenue Equivalence of the Volunteer’s Dilemma and the Stag Hunt Game and Inferiority of Intermediate Thresholds," Discussion Paper Series RECAP15 13, RECAP15, European University Viadrina, Frankfurt (Oder).
  • Handle: RePEc:euv:dpaper:13
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    References listed on IDEAS

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    1. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
    2. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-248, March.
    3. Rydval, Ondrej & Ortmann, Andreas, 2005. "Loss avoidance as selection principle: Evidence from simple stag-hunt games," Economics Letters, Elsevier, vol. 88(1), pages 101-107, July.
    4. Battalio, Raymond & Samuelson, Larry & Van Huyck, John, 2001. "Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games," Econometrica, Econometric Society, vol. 69(3), pages 749-764, May.
    5. 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.
    6. van Damme, E.E.C. & Carlsson, H., 1993. "Equilibrium selection in stag hunt games," Other publications TiSEM 8951ae88-c6e4-42e6-b253-b, Tilburg University, School of Economics and Management.
    7. Diekmann, Andreas, 1993. "Cooperation in an Asymmetric Volunteer's Dilemma Game: Theory and Experimental Evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 22(1), pages 75-85.
    8. Andreas Diekmann, 1985. "Volunteer's Dilemma," Journal of Conflict Resolution, Peace Science Society (International), vol. 29(4), pages 605-610, December.
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    More about this item

    Keywords

    Threshold Public Goods; binary decisions; mixed strategy equilibria;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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