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The instability of the voluntary contribution mechanism

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  • Tatsuyoshi Saijo

    (School of Management, Kochi University of Technology)

Abstract

I consider systems with voluntary contribution mechanisms (VCM) in a quasilinear environment, showing that they are not asymptotically stable under simultaneous difference equations, and are structurally unstable under simultaneous differential equations. However, a VCM system is stable in a Cobb–Douglas (CD) environment under simultaneous differential equations; it is also stable under simultaneous difference equations given conditions on the slope of best response functions and the number of players. Most of the parameters investigated in nonlinear experiments on the VCM so far have been on the boundaries between stability and instability, and there has been hardly any work on instability. Therefore, research on the private provision of public goods faces a new challenge in addition to free riding.

Suggested Citation

  • Tatsuyoshi Saijo, 2014. "The instability of the voluntary contribution mechanism," Working Papers SDES-2014-3, Kochi University of Technology, School of Economics and Management, revised Oct 2014.
    • Handle: RePEc:kch:wpaper:sdes-2014-3
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    File URL: http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2014-3.pdf
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    References listed on IDEAS

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    Cited by:

    1. Feng, Jun & Saijo, Tatsuyoshi & Shen, Junyi & Qin, Xiangdong, 2018. "Instability in the voluntary contribution mechanism with a quasi-linear payoff function: An experimental analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 67-77.
    2. Philip D. Grech, 2019. "Give and Let Give: Alternative Mechanisms Based on Voluntary Contributions," Games, MDPI, vol. 10(2), pages 1-11, May.
    3. Tatsuyoshi Saijo, 2020. "Global Stability of Voluntary Contribution Mechanism with Heterogeneous Preferences," Working Papers SDES-2020-6, Kochi University of Technology, School of Economics and Management, revised Jul 2020.
    4. Tatsuyoshi Saijo, 2015. "The sandwich property in the voluntary contribution mechanism:The instability approach," Working Papers SDES-2015-13, Kochi University of Technology, School of Economics and Management, revised Mar 2015.

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    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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