Asset Markets And Equilibrium Selection In Public Goods Games With Provision Points: An Experimental Study
In this paper we report some experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and efficiency. A control treatment reveals that, as in the experimental literature for similar environments, subjects' behavior converges to the inefficient outcome whenever they are endowed with the right to play the game. However, auctioning off such a right among a larger population of players has a significant efficiency-enhancing effect. Once the Pareto-dominant equilibrium in the second stage is reached, the auction price at the first stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. The full contribution equilibrium was extremely robust: individual subjects' deviations from the equilibrium strategy were not able to force lower market prices and did not affect provision of the public good in subsequent periods.
|Date of creation:||Nov 2001|
|Publication status:||Published by Ivie|
|Contact details of provider:|| Postal: C/ Guardia Civil, 22, Esc 2a, 1o, E-46020 VALENCIA|
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
Web page: http://www.ivie.es/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Van Huyck John B. & Battalio Raymond C. & Beil Richard O., 1993. "Asset Markets as an Equilibrium Selection Mechanism: Coordination Failure, Game Form Auctions, and Tacit Communication," Games and Economic Behavior, Elsevier, vol. 5(3), pages 485-504, July.
- R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
- Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-366, April.
- Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
- Mark Isaac, R. & McCue, Kenneth F. & Plott, Charles R., 1985.
"Public goods provision in an experimental environment,"
Journal of Public Economics,
Elsevier, vol. 26(1), pages 51-74, February.
- Isaac, R. Mark & McCue, Kenneth F. & Plott, Charles R., "undated". "Public Goods Provision in an Experimental Environment," Working Papers 428, California Institute of Technology, Division of the Humanities and Social Sciences.
- Isaac, R Mark & Walker, James M, 1988. "Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 585-608, October.
- R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, vol. 62(3), pages 217-236, September.
- Gérard P. Cachon & Colin F. Camerer, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 165-194.
- John B. Van Huyck & Raymond C. Battalio & Richard O. Beil, 1991. "Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 885-910. Full references (including those not matched with items on IDEAS)