Changes in the Threshold Uncertainty in a Simultaneous Subscription Game

Abstract

This paper considers a discrete public good subscription game under threshold uncertainty and private information on valuations and analyzes the effect of change in cost uncertainty on the private contribution equilibrium under a simultaneous institution. Comparative statics with respect to the changes in the cost distribution are derived. We find that if the cost distribution becomes more dispersed, in the sense of a mean-preserving spread, the expected total contributions to the public good will decrease. Our proposition provides a policy implication that if the suppliers are able to reduce the uncertainty of the cost distribution, the private contribution to the public good will increase.

Contribution Mechanisms and Types of Cost Threshold in the Subscription Game with Private Information on Valuation: Public Good Experiments

“…Analyzing a similar question, Suleiman et al (2001) showed that the effect of threshold uncertainty is moderated by the threshold mean: contribution to the public good increases as a function of uncertainty for the lower threshold mean, but decreases for the higher threshold mean. Barbieri and Malueg (2010) and Gronberg and Peng (2014)…”