Contingent Reasoning and Dynamic Public Goods Provision

Evan Calford and Timothy Cason

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: Individuals often possess private information about the common value of a public good. Their contributions toward funding the public good can therefore reveal information that is useful to others who are considering their own contributions. This experiment compares static and dynamic contribution decisions to determine how hypothetical contingent reasoning differs in dynamic decisions. The timing of individuals’ sequential contribution decisions is endogenous. Funding the public good is more efficient with dynamic than static decisions in equilibrium, but this requires decision-makers to understand that in the future they can learn from past events. Our results indicate that a substantial fraction of subjects appreciate the benefits of deferring choice to learn about and condition their behavior on the contribution decisions of others. Many subjects, however, exhibit a bias away from rational choices in the direction of Cursed equilibrium, and some appear to extract information only from prior, and not concurrent, behavior.

Keywords: Cursed equilibrium; Voluntary contributions; Club goods; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D71 D91 H41 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Contingent Reasoning and Dynamic Public Goods Provision (2024)
Working Paper: Contingent Reasoning and Dynamic Public Goods Provision (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2021-679

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