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EXPERIMENTAL ANALYSIS OF RISK AND UNCERTAINTY IN PROVISIONING PRIVATE AND PUBLIC GOODS
Author(s) -
GANGADHARAN LATA,
NEMES VERONIKA
Publication year - 2009
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 - 10.1111/j.1465-7295.2007.00118.x
Subject(s) - public good , economics , private good , microeconomics , provisioning , stochastic game , public goods game , public economics , computer science , telecommunications
This paper uses laboratory evidence from public goods games to examine how in payoff‐equivalent situations, decision makers contribute toward private or public goods when they are exposed to different kinds of risks and uncertainties in the provision of these goods. We find that location matters with subjects moving away from the environmental uncertainty in favor of strategic uncertainty when that uncertainty is located on the private good. When the uncertainty relates to the public good, subjects face both kinds of uncertainties on the same good, leading to a significant drop in contributions. An opportunity to reduce uncertainty increases cooperation. ( JEL C90, D81, H41)