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

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  • Fenig, Guidon
  • Gallipoli, Giovanni
  • Halevy, Yoram

Abstract

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.

Suggested Citation

  • Fenig, Guidon & Gallipoli, Giovanni & Halevy, Yoram, 2015. "Complementarity in the Private Provision of Public Goods by Homo Pecuniarius and Homo Behavioralis," Microeconomics.ca working papers yoram_halevy-2015-21, Vancouver School of Economics, revised 02 May 2016.
  • Handle: RePEc:ubc:pmicro:yoram_halevy-2015-21
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    File URL: http://faculty.arts.ubc.ca/yhalevy/VCMC.pdf
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    More about this item

    Keywords

    Public goods; Voluntary Contribution Mechanism; Complementarity; Coordination; Altruism; Competitiveness; Warm-Glow; Joy of Winning; Laboratory Experi;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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