Free Riding and Consistent Conjectures in the Provision of Public Goods: An Experimental Study

Hong Yih Chu and Wenchuan Li

Australian Economic Papers, 1999, vol. 38, issue 1, 26-39

Abstract: The aim of this paper is to examine free riding and consistent conjectures in the provision of public goods. In this research, a Lindahl optimum is never reached. The prediction that public goods will inevitably be under‐supplied is proven. With repetition, the subjects' contributions move toward the free riding level instead of the Lindahl optimum. However, a surprising observation is that the public goods provided sometimes increase with time. Economists and males behave more selfishly than other people. Most people expect matching behaviour, and most of them do behave accordingly. The extent to which people will match is overestimated, therefore expectations about the amount of public goods and the amount of actually provided public goods will be revised accordingly and tend to decline over time.

Date: 1999
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