Coordination and the Provision of Discrete Public Goods by Correlated Equilibria

Abstract

The strategic analysis of the private provision of a discrete public good has shown the existence of multiple Nash equilibria with the efficient number of players voluntarily contributing. However the coordination issue is left unexplained by this literature. The experimental evidence shows that communication among players is helpful in achieving cooperation. We claim that, from the theoretical point of view, this is equivalent to playing correlated equilibria in an extended public good game with communication, modeled as Chicken. We characterize such equilibria as feasible coordination mechanisms to achieve public goods provision in the general contribution game. We further introduce a second kind of game characterized by payoff externalities that may persist after the minimal threshold of contributors is achieved. While it is easy to show the existence of Pareto efficient correlated equilibria in the first game, in the second one players face incentive problems such that a first best cannot always be an equilibrium. Nevertheless there exist correlated equilibria that can qualify as incentive efficient mechanisms, once free riding is seen as a moral hazard issue. Finally, with an example, we discuss the impact of coalition formation in our framework.

Médiation et Coordination Internationale : Le poids du président des négociations

“…De même, ils présentent les situations pour lesquelles au moins un équilibre corrélé améliore au sens de Pareto le ou les équilibres de meilleure réponse de ces jeux. Enfin, Cavaliere [2001] s'intéresse à la caractérisation des jeux de biens publics qui peuvent être améliorés par corrélation et Cason et Sharma [2007] proposent une validation expérimentale de la médiation par corrélation dans un jeu de biens publics. De manière complémentaire à ces travaux, nous caractérisons l'ensemble des équilibres corrélés d'un jeu bien spécifique : un jeu de dépollution dont les fonctions d'utilité des joueurs sont inspirées de Barrett [1994].…”

Correlated Equilibrium, Conformity, and Stereotyping in Social Groups

“…See Cavaliere () for a study of correlated equilibrium in the provision of threshold public goods. There correlation is viewed as the consequence of communication.…”

Leading by Example and International Collective Action

“…Palfrey and Rosenthal (1984) andCavaliere (2001) examine noncoercive strategies for achieving cooperation in binary choice models where the number of players varies.…”