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Voluntary Contribution Mechanism Played over an Infinite Horizon
Author(s) -
Tan Lijia,
Wei Lijia
Publication year - 2014
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12068
Subject(s) - monotonic function , mechanism (biology) , repetition (rhetorical device) , economics , turnover , period (music) , horizon , econometrics , mathematical economics , mathematics , psychology , microeconomics , physics , mathematical analysis , philosophy , epistemology , linguistics , geometry , management , acoustics
We experimentally investigate the evolution play in an infinitely repeated voluntary contribution mechanism ( VCM ). We find that in infinitely repeated VCM games: (i) average contributions in the first round are similar to those of finitely repeated VCM games; (ii) most groups have a non‐monotonic trend of contribution with repetition; and (iii) contributions remain at the same level after an unexpected restart. The data provides strong support for heterogeneous subjects, which may explain the non‐monotonic trend of average contributions. This trend is caused by one category of subjects who expect others to contribute in period t as they did in period t − 1.