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Asset Markets and Equilibrium Selection in Public Goods Games with Provision Points: An Experimental Study
Author(s) -
Broseta Bruno,
Fatas Enrique,
Neugebauer Tibor
Publication year - 2003
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbg029
Subject(s) - public good , economics , microeconomics , asset (computer security) , public goods game , point (geometry) , population , equilibrium selection , experimental economics , repeated game , game theory , geometry , computer security , mathematics , demography , sociology , computer science
We report 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 individual behavior. Auctioning off such a right among a larger population of players strikingly enhances public good provision. Once public good provision is obtained, the auction price at the preliminary stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. Individual deviations from the equilibrium strategy are neither able to force lower market prices nor to affect provision of the public good in subsequent periods. (JEL C72 , C92 , H41 )