C. Cox
Cursed Beliefs with Common-Value Public Goods
Cox, C.
Authors
Abstract
I show how improper conditioning of beliefs can reduce 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. Naïve players who condition expectations only on their private information contribute too little, despite the absence of free-riding incentives. In a laboratory experiment, contributions indeed fall short of the equilibrium prediction. Using modified games with different belief-conditioning effects, I verify that subjects fail to condition beliefs properly. However, improper belief conditioning cannot fully explain the results.
Citation
Cox, C. (2015). Cursed Beliefs with Common-Value Public Goods. Journal of Public Economics, 121, 52-65. https://doi.org/10.1016/j.jpubeco.2014.11.006
Journal Article Type | Article |
---|---|
Publication Date | Jan 1, 2015 |
Deposit Date | Nov 19, 2014 |
Publicly Available Date | Nov 19, 2014 |
Journal | Journal of Public Economics |
Print ISSN | 0047-2727 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 121 |
Pages | 52-65 |
DOI | https://doi.org/10.1016/j.jpubeco.2014.11.006 |
Keywords | Public goods, Experiments, Cursed equilibrium, Game theory. |
Public URL | https://durham-repository.worktribe.com/output/1417386 |
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Copyright Statement
NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Public Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Public Economics, 121, January 2015, 10.1016/j.jpubeco.2014.11.006.
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