The Private Provision of Public Goods under Uncertainty: A Symmetric-Equilibrium Approach

Various studies have examined whether increased uncertainty about the non‐Nash response of others to an individual's voluntary contribution to a public good affects that individual's contribution so as to mitigate the free‐rider problem. We extend this single‐agent approach to the analysis...

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Bibliographic Details
Published in:Journal of public economic theory 2006-12, Vol.8 (5), p.863-873
Main Authors: KEENAN, DONALD C., KIM, ILTAE, WARREN JR, RONALD S.
Format: Article
Language:English
Subjects:
Equilibrium
Public good
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Summary:Various studies have examined whether increased uncertainty about the non‐Nash response of others to an individual's voluntary contribution to a public good affects that individual's contribution so as to mitigate the free‐rider problem. We extend this single‐agent approach to the analysis of a symmetric equilibrium. We provide conditions on group size and endogenous relative risk aversion that imply increased equilibrium contributions in response to greater uncertainty about the productivity of each individual's contribution to the actual level of the public good. These results enable us to broaden the circumstances in which the theory predicts that increased uncertainty reduces free riding.
ISSN:1097-3923
1467-9779
DOI:10.1111/j.1467-9779.2006.00292.x