Maintaining Private and Public Facilities: Theory and Experiment

Mayuko Nakamaru, Takaaki Ohkawauchi, Rei Okawa, Koki Oikawa, Yuto Otani, Hiroo Sasaki, Junyi Shen, Koichi Takase, Hirofumi Yamamura and Takehiko Yamato
Additional contact information
Mayuko Nakamaru: School of Environment and Society, Institute of Science Tokyo, JAPAN
Takaaki Ohkawauchi: College of Humanities and Sciences, Nihon University, JAPAN
Rei Okawa: School of Engineering, Tokyo Institute of Technology, JAPAN
Koki Oikawa: School of Social Sciences, Waseda University, JAPAN
Yuto Otani: School of Engineering, Tokyo Institute of Technology, JAPAN
Hiroo Sasaki: Professor Emeritus, Waseda University, JAPAN
Koichi Takase: Faculty of Commerce, Waseda University, JAPAN
Hirofumi Yamamura: Faculty of Business Administration, Komazawa University, JAPAN
Takehiko Yamato: School of Engineering, Institute of Science Tokyo, JAPAN

No DP2024-35, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper studies two types of facility maintenance games in the laboratory, in a cross-cultural experiment conducted in Tokyo and Guam. One is called the one-person maintenance game, in which only one player makes maintenance investment decisions for a privately owned facility, and the other is called the two-person maintenance game, in which two players make maintenance investment decisions for a shared public facility without communication. Both games are characterized by the fact that the durability of the facility depends on each player's decision of costly investment in its maintenance, and that the facility can be enjoyed as long as it is available, i.e., the probability that the game will end or continue depends on each player's decision of costly investment in its maintenance. Our main results are that first, most subjects chose to invest in each experimental round of both games. At the beginning of the two games, the percentage of subjects who are willing to invest is significantly higher among the Tokyo subjects than among the Guam subjects. However, as the game proceeds, the difference in this percentage between the two groups becomes statistically insignificant. Second, in either the one-person game, the two-person game or both, subjective factors (i.e., risk and time preferences) and/or objective factors (i.e., the durability of the facility) play important roles in influencing the investment behaviors of either the Guam subjects, the Tokyo subjects or both. Third, there is a significant difference in the investment ratio between the one-person and two-person games among the Tokyo subjects, but not among the Guam subjects. Finally, we also investigate the factors affecting different behaviors between the two games. The results indicate the possibility of conditional cooperative behavior among the Guam subjects and the possibility of free rider behavior among the Tokyo subjects in the two-person game.

Keywords: Maintenance games; Public good; Free rider; Risk preference; Time preference; Inter-regional comparison (search for similar items in EconPapers)
JEL-codes: C71 C72 C91 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2024-11
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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