I show how improper conditioning of beliefs can lead to under-contribution in public goods environments with interdependent values. I consider a simple model of a binary, excludable public good. In equilibrium, provision of the public good is good news about its value. Naive players who...

This paper considers a model of voluntary public good provision with two players and convex costs. I demonstrate that the provision of public good is higher in the sequential framework under fairly general conditions. This outcome shows that introducing convex costs may reverse under some...

Decisions on joint funding of continuous public goods between two agents often involve heterogeneous targets. We introduce loss functions in a contribution game in order to study the effect of this conflict. Unlike Varian (1994), joint contribution occurs only if the players’ targets are...

Using a simple two-group model of the private provision of public goods, this paper investigates how endogenous formation of within-group cooperation is affected by different types and degrees of between-group interactions. We show that when between-group interactions are of the same directions...

Governments sometimes promote rules backed by sanctions too weak to make obedience privately optimal. Factors that may help make such rules effective include the presence of informal sanctions by peers, and implementation through voting. I study the impact of non-deterrent formal sanctions on...

We run a public good experiment with four different treatments. The payoff function is chosen such that the Nash equilibrium (NE) and the collective optimum (CO) are both in the interior of the strategy space. We try to test the effect of varying the level of the collective optimum, which...

In this brief comment, the public choice theory aims to distinguish the dilemmas and conflicts in formal and empirical. The hypothesis argues that the reality more complex than the principles of choice of Pareto and Liberalism*. Both the ethics and politics are taking decisions that are not...

An agent can make an observable but non-contractible investment. A principal then offers to collaborate with the agent to provide a public good. Private information of the agent about his valuation may either decrease or increase his investment incentives, depending on whether he learns his type...

Reputation systems that rely on feedback from traders are important institutions for helping sustain trust in markets, while feedback information is usually considered a public good. We apply both theoretical models and experiments to study how raters' feedback behavior responds to different...

In their recent work Thomas S. Schelling (2007, 2010), reiterating original arguments about game theory and its applications to social sciences. In particular, game theory helps to explore situations in which agents make decisions interdependent (strategic communication). Schelling's originality...