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The Private Provision of Public Goods under Uncertainty: A Symmetric‐Equilibrium Approach
Author(s) -
KEENAN DONALD C.,
KIM ILTAE,
WARREN RONALD S.
Publication year - 2006
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2006.00292.x
Subject(s) - public good , economics , nash equilibrium , microeconomics , private good , free riding , free rider problem , productivity , risk aversion (psychology) , public goods game , public economics , mathematical economics , expected utility hypothesis , macroeconomics , incentive
Various studies have examined whether increased uncertainty about the non‐Nash response of others to an individual's voluntary contribution to a public good affects that individual's contribution so as to mitigate the free‐rider problem. We extend this single‐agent approach to the analysis of a symmetric equilibrium. We provide conditions on group size and endogenous relative risk aversion that imply increased equilibrium contributions in response to greater uncertainty about the productivity of each individual's contribution to the actual level of the public good. These results enable us to broaden the circumstances in which the theory predicts that increased uncertainty reduces free riding.