The Voluntary Provision of a Pure Public Good with Diminishing Marginal Returns

Susan Laury, James Walker and Arlington Williams

Public Choice, 1999, vol. 99, issue 1-2, 139-60

Abstract: In experiments investigating the voluntary provision of a pure public good, participants consistently allocate resources to this good when the Nash prediction is to allocate nothing. This paper explores the robustness of this result when the Nash prediction calls for a division of resources between the private and public goods. The authors consider how a change in individual resource endowments and supplemental earnings information affect allocations to the public good. Results indicate that, under both the high and low endowment conditions, groups continue to allocate more resources than the Nash prediction. However, providing participants with detailed instructions that describe the declining marginal benefit to the public good leads to a significant decrease in allocations to the public good. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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