Bayesian Nash Equilibria with a Provision Point: An Experimental Test
This paper extends theory and experimentation in the context of two parties in a group who contribute to a public good with a provision point. This study analyzes the voluntary contributions game in which a public good is provided if and only if the sum of contributions meets or exceeds a threshold. I analyze several Bayesian Nash equilibria in this game and examine their efficiency implications. In an experimental test of a public-goods problem with a threshold and rebate, the observed behavior of the subjects generally was consistent with a linear bidding strategy in which bids increased with realized valuation. Further, the behavior of some subjects was sensitive to changes in the prior distribution of valuations and the relative cost of the public good.
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"Efficient mechanisms for bilateral trading,"
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- R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, vol. 62(3), pages 217-236, September. Full references (including those not matched with items on IDEAS)
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