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Bayesian Nash Equilibria with a Provision Point: An Experimental Test

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  • Lowell Johnson

    () (Rutgers)

Abstract

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.

Suggested Citation

  • Lowell Johnson, 1997. "Bayesian Nash Equilibria with a Provision Point: An Experimental Test," Departmental Working Papers 199618, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:199618
    as

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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/1996-18.pdf
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    References listed on IDEAS

    as
    1. Hoffman, Elizabeth & Spitzer, Matthew L, 1982. "The Coase Theorem: Some Experimental Tests," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 73-98, April.
    2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    3. R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, vol. 62(3), pages 217-236, September.
    4. repec:cup:apsrev:v:80:y:1986:i:04:p:1171-1185_18 is not listed on IDEAS
    5. Harrison, Glenn W & McKee, Michael, 1985. "Experimental Evaluation of the Coase Theorem," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 653-670, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bayesian; Bayesian Nash equilibria; contribute; experiment; provision point; public; public good; public goods; threshold; voluntary contribution; voluntary contributions;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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