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Complementarity in the Private Provision of Public Goods by Homo Pecuniarius and Homo Behavioralis

Listed author(s):
  • Fenig, Guidon
  • Gallipoli, Giovanni
  • Halevy, Yoram

We examine coordination in private provision of public goods when agents' contributions are complementary. When complementarity is sufficiently high an additional full-contribution equilibrium emerges. We experimentally investigate subjects’ behavior using a between-subject design that varies complementarity. When two equilibria exist, subjects coordinate on the full-contribution equilibrium. When complementarity is sizable but only a zero-contribution equilibrium exists, subjects persistently contribute above it. Observed choices and and other nonchoice data indicate heterogeneity among subjects and two distinct types. Homo pecuniarius maximizes profits by best-responding to beliefs, while Homo behavioralis identifies this strategy but chooses to deviate from it – sacrificing pecuniary rewards to support altruism or competitiveness.

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File URL: http://faculty.arts.ubc.ca/yhalevy/VCMC.pdf
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Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number yoram_halevy-2015-21.

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Length: 60 pages
Date of creation: 15 Nov 2015
Date of revision: 02 May 2016
Handle: RePEc:ubc:pmicro:yoram_halevy-2015-21
Contact details of provider: Web page: http://www.economics.ubc.ca/

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