Premium
Unequal Contributions from Symmetric Agents in a Local Interaction Model
Author(s) -
CORAZZINI LUCA,
GIANAZZA UGO
Publication year - 2008
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.1467-9779.2008.00366.x
Subject(s) - context (archaeology) , nash equilibrium , normality , economics , mathematical economics , symmetric equilibrium , public good , best response , microeconomics , mathematics , equilibrium selection , game theory , repeated game , statistics , biology , paleontology
The main findings of the theory on the private provision of public goods under the assumptions of symmetric agents and normality are that (1) there exists a unique Nash equilibrium in which everybody contributes the same; and (2) this pattern is stable. We show that these findings no longer hold in a context characterized by local interaction. In this context, it is always possible to find preferences satisfying the assumption of normality such that the symmetric Nash equilibrium is unstable, and there exist asymmetric Nash equilibria which are locally stable.