Contribution To A Public Good Under Subjective Uncertainty

  • Author
    Anwesha Banerjee and Nicolas Gravel
  • Publisher
    Institut Français de Pondichéry / Centre de Sciences Humaines
  • Year :
    2018
  • Pages :
    26 p.
  • Series
    CSH-IFP Working Papers n°10
  • Price :

    (Not for sale). Available online at: https://halshs.archives-ouvertes.fr/halshs-01734745

This paper examines how voluntary contributions to a public good are affected by the contributors’ heterogeneity in beliefs about the uncertain impact of their contributions. It assumes that contributors have Savagian preferences that are represented by a two-state-dependent expected utility function and different beliefs about the benefit that will result from the sum of their contributions. Under some conditions imposed on preferences, we establish general comparative static results on the effect of specific changes in the distribution of beliefs on the (Nash) equilibrium provision of public good. We specifically shows that the equilibrium public good provision is increasing with respect to first-order and second order stochastic dominance changes in the distribution of beliefs.

Voluntary provision, public good, uncertainty, beliefs, optimism, consensus