ASSET MARKETS AND EQUILIBRIUM SELECTION IN PUBLIC GOODS GAMES WITH PROVISION POINTS: AN EXPERIMENTAL STUDY

Enrique Fatas (), Tibor Neugebauer and Bruno Broseta
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Bruno Broseta: Organismo Público Valenciano de Investigación (OPVI)

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we report some experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and efficiency. A control treatment reveals that, as in the experimental literature for similar environments, subjects' behavior converges to the inefficient outcome whenever they are endowed with the right to play the game. However, auctioning off such a right among a larger population of players has a significant efficiency-enhancing effect. Once the Pareto-dominant equilibrium in the second stage is reached, the auction price at the first stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. The full contribution equilibrium was extremely robust: individual subjects' deviations from the equilibrium strategy were not able to force lower market prices and did not affect provision of the public good in subsequent periods.

Keywords: Public Goods; Provision Points; Experimental Markets. (search for similar items in EconPapers)
Pages: 1 pages
Date: 2001-11
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Citations: View citations in EconPapers (5)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2001-29.pdf Fisrt version / Primera version, 2001 (application/pdf)

Related works:
Journal Article: Asset Markets and Equilibrium Selection in Public Goods Games with Provision Points: An Experimental Study (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2001-29

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