Group size and the private supply of a best-shot public good

This paper examines the relationship between group size and the likelihood that a best-shot public good is voluntarily provided. Holding fixed each member's individual probability of supplying the public good, the likelihood of supply increases as the group grows. This is the size effect. However, as group size increases, the probability that each individual member supplies decreases. This is the strategic effect. The net effect of group size on the likelihood is thus ambiguous. As group size increases without bounds, the two effects are offset—the likelihood approaches a finite limit.     

Estimating the causal effect of beliefs on contributions in repeated public good games

We use instrumental variables for estimating the causal effect of beliefs on contributions in repeated public good games. The effect is about half as large as suggested by ordinary least squares. Thus, we present evidence that beliefs have a causal effect on contributions, but also that beliefs are endogenous. We compare the causal, belief-based model of contributions to alternative models based on matching the previous contributions of others and responding to one’s deviation from the average in the previous round. The causal, belief-based model performs well, indicating that beliefs have a central role in determining contributions.     

Opacity in bargaining over public good provision

We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will fall short of the socially desirable level. Compared with unilateral delegation, bilateral delegation is never worse from a welfare perspective.     

Private provision of a discrete public good: efficient equilibria in the private-information contribution game

We study the voluntary provision of a discrete public good via the contribution game. Players independently and simultaneously make nonrefundable contributions to fund a discrete public good, which is provided if and only if contributions cover the cost of production. We characterize nonconstant continuous symmetric equilibria, giving sufficient conditions for their existence. We show the common normalization by which players’ values are distributed over [0, 1] is not without loss of generality: if the distribution over this interval has continuous density f with f(0) >  0, then no (nonconstant) continuous symmetric equilibrium exists. We study in detail the case in which players’ private values are uniformly distributed, showing that, generically, when one continuous equilibrium exists, a continuum of continuous equilibria exists. For any given cost of the good, multiple continuous equilibria cannot be Pareto ranked. Nevertheless, not all continuous equilibria are interim incentive efficient. The set of interim incentive efficient equilibria is exactly determined. The authors thank Manfred Dix, George Mailath, Andrew Postlewaite, and an anonymous referee for their comments.     

Group size and the (in)efficiency of pure public good provision

Are larger groups better at cooperation than smaller groups? This paper investigates, under controlled conditions, the presence and direction of a possible group size effect in pure public good provision by large heterogeneous groups. Employing subjects drawn from the general population and introducing Internet-based procedures to study this question, we collected experimental evidence from 1110 subjects playing a linear public goods game in groups of 10, 40, and 100 members. We find a positive and significant group size effect: Increasing group size by a factor of 10 (4) increased efficiency by 10 (6) percent. The effect arose at the intensive margin and with repetition. Those who contributed contributed more in larger groups. Larger and smaller groups had similar initial contribution levels, but cooperation rates declined more slowly in the larger groups. Free-riding was invariant to group size, despite subjects׳ persistent beliefs of a negative group size effect at the extensive margin. Further econometric examination of the data supports these findings and provides starting points for future theoretical and experimental research on the group size effect.     

Weak links, good shots and other public good games: Building on BBV

We suggest an alternative way of analyzing the canonical Bergstrom-Blume-Varian model of non-cooperative voluntary contributions to a public good that avoids the proliferation of dimensions as the number of players is increased. We exploit this approach to analyze models in which the aggregate level of public good is determined as a more general social composition function of individual gifts — specifically, as a CES form — rather than as an unweighted sum. We also analyze Hirshleifer's weakest-link and best-shot models. In each case, we characterize the set of equilibria, in some cases establishing existence of a unique equilibrium as well as briefly pointing out some interesting comparative static properties. We also study the weakest-link and best-shot limits of the CES composition function and show how the former can be used for equilibrium selection and the latter to establish that equilibria of some better-shot games are identical to those of the much simpler best-shot game.     

External heterogeneity and its impact on open innovation performance

While current research commonly finds there may be an optimum overall level of search depth commitment at the apex of an inverted U relationship, it says comparatively little about the optimal allocation of search depth between competing search channels. Neither does it explore in depth the qualitative differences in the breadth of different external search channels. Here we conceptually and empirically explore the idea of the intra-search channel allocation problem using the concept of heterogeneity in search depth and breadth. We explore how variations in the distribution of open innovation search depth and breadth influnence innovation performance and in doing so contribute to a more fine grained conceptual understanding of external innovation. We do so an emerging market context, namely China. Our contributions are therefore twofold, involving both conceptual and empirical elements.     

The overprovision anomaly of private public good supply

It is well known that private provision of a public good may lead to a higher supply than that in some Pareto optimal allocation. The traditional view attributes this overprovision anomaly to a specific kind of preferences. The present paper, however, shows that preferences do not play a decisive role. Assuming normality, overprovision will occur only if the distribution of income is extremely skewed and Pareto optimal allocations are not within the set of cost-share equilibria.     

Intragroup competition in public good games: The role of relative performance incentives and risk attitudes

We analyze a public good game (PGG) with intragroup competition in which, generally but not always, the dominant strategy is to not contribute; therefore, free riding is the unique Nash equilibrium, not achieving Pareto efficiency. We propose a PGG setup where subjects' contributions are rewarded with different individual returns following a rank‐order voluntary contribution mechanism. It is found that the resulting competition for a better return significantly increases contributions. This effect is sensitive to the salience of return differences rewarding higher contributions. Furthermore, the positive effect of return differences on contribution levels depends on an individual's return‐to‐risk sensitivity as elicited through an independent risk elicitation task.     

The impact of public and semi-public information on cotton futures market

This study estimated the impact of all major public and semi-public reports on the cotton futures market from 1995 through 2012. The estimation was based on the event study approach with the events measured by the release of five major reports: Export Sales, Crop Progress, World Agricultural Supply and Demand Estimates (WASDE) and Prospective Plantings (public reports from US Department of Agriculture) and Cotton This Month (semi-public report from International Cotton Advisory Committee). The best-fitting IGARCH(1,1)-t model that accounted for the day-of-week, seasonality and stock levels was used to measure the report effects on daily nearby cotton close-to-close futures returns. Prospective Plantings and WASDE reports appeared to be the most important sources of information in the cotton markets moving the conditional standard deviation of returns by an average of 14.4 and 9.6 percentage points, respectively. However, significant market reaction was not found for the other three reports. Our analysis revealed that, in the presence of clustering, ignoring the impact of other reports would have resulted in about 18% overestimation of WASDE impact.     

The impact of public capital on the US private economy: new evidence and analysis

This paper presents new evidence on the impact of public capital on the productivity of the US private sector. Using a production function approach, we estimate the impact of public investment on private capital productivity, specifically addressing the empirical critiques of earlier studies. We find evidence of a cointegrating relationship in a dynamic specification of an empirical model that includes public infrastructure as a factor of production, indicating the existence of a long‐run relationship between the US public capital stock and the productivity of the private capital stock. The results are used to explore how the decline in the growth rate of the public capital stock would have affected the performance of the private sector.     

Inequality,public good provision and the composition of trade

This paper investigates the effect of trade liberalization on the provision of public goods and shows that inequality also plays a vital role here. Public goods help enhance the productivity of firms, lower prices and raise profitability. The provision of public goods has different effects in closed and open economies. In an open economy, the impact of productive spending on increasing profit is stronger. Consequently, the opening up of the economy shifts the benefits of productive public goods from consumers to firms. As the median voters’, share of the firm’s profit rises, public goods become more appealing and flourish. Consequently, the manufacturing export is boosted by a rise in productivity.     

Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis

One important determinant of voluntary contributions to public goods is the value of the public good relative to that of the forgone private good. Isaac, Walker and Thomas (1984) formalized this relation in the Marginal Per Capita Return (MPCR) and demonstrated its influence on the provision of linear public goods. This paper develops a parallel concept, in the context of a threshold public good, the Step Return (SR). After providing a meta-analysis of the effect of SR in previous experiments, we compare contributions in threshold public goods games with low, medium and high SRs. Results show that subjects respond to the SR in this setting just as they respond to the MPCR in the linear public goods setting: higher SRs lead to more contributions.     

Second-party and third-party punishment in a public goods experiment

We experimentally investigate whether third-party punishment is more effective than second-party punishment to increase public goods contribution. In our experiment, third parties first played the standard public goods game and then made punishment decisions as independent bystanders. We find that third parties punished more frequently, severely and less antisocially, resulting in a higher contribution level than that driven by second-party punishment. The third party’s exaggerated emotion towards free riders is proposed to explain their superior punishment effectiveness.     

A generalized impure public good and linear characteristics model of green consumption

This paper provides a general framework for understanding consumer behavior related to goods and services that may be considered environmentally friendly, ethically produced, fairly traded, or some combination thereof. We generalize the impure public good model and derive its comparative static properties. The model accounts for any number of impure public (green) goods and joint production of any number of both private and public characteristics. The generalization provides a bridge between the impure public good model and the well-known linear characteristics model, both of which are special cases of the model developed here. The results show how demand for green goods and characteristics such as environmental quality depends on wealth, exogenously given levels of public goods, and the technologies of joint production. The effects of changes in technology depend critically on whether jointly produced characteristics are complements or substitutes in consumption. Several of the results are rather counterintuitive and differ in meaningful ways from existing models of impure public goods and linear characteristics. The results also illuminate several reasons for greater caution about whether it is reasonable to assume that green goods and services are necessarily beneficial for the provision of public goods.     

The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally

We propose the minimum approval mechanism (MAM) for a standard linear public good environment with two players. Players simultaneously and privately choose their contributions to the public good in the first stage. In the second stage, they simultaneously decide whether to approve the otherʼs choice. Both contribute what they choose in the first stage if both players approve; otherwise, both contribute the minimum of the two choices in the first stage. The MAM implements the Pareto-efficient allocation in multiple solution concepts including backward elimination of weakly dominated strategies (BEWDS), limit logit agent quantal response equilibrium, subgame perfect minimax regret equilibrium, level-k thinking, and diagonalization heuristics. Moreover, the MAM is unique under plausible conditions. Overall, contributions in the MAM experiment averaged 94.9%. Quantifying subjectsʼ responses to the questionnaire reveal heterogeneous reasoning processes and highlight the importance of developing mechanisms that implement the desired social choice outcome in multiple solution concepts.     

The benefits of voluntary leadership in experimental public goods games

We study the effects of voluntary leadership in experimental public goods games when each group member can volunteer to contribute before the other members. We find that voluntary leadership increases contributions significantly, compared to a treatment where leadership is enforced exogenously.     

The effect of leadership on performance management, good governance, internal and external satisfaction in study programs

Rapid changes in business environment have increased the needs of graduates who have capabilities of anticipating to the changes. The faculty, especially at the level of study program, has an important role in affecting the quality of graduates, because the study program is the core element in the higher education institution which involves directly in planning, organizing, executing and controlling the teaching and learning activities. This dissertation is to examine the effect of leadership on performance management and good governance, and also to examine the effect of performance management and good governance on internal and external satisfaction. The data for this causal research is collected by questionnaire. Unit of analysis in this research is all study programs in all accredited faculty of economics in East Java. The respondents are academic staffs, students and administrative staffs in the study program. There were 83 of 125 accredited study program which has been successfully contacted and agreed to participate in the research. There were 900 students and 285 academic staffs filling up the questionnaires. The data analysis is conducted by Path Analysis with the SPSS 11.5 version software to measure construct validity and reliability and to test causal relationships between variables in the model. The findings of the research showed that： （1） Leadership affects performance management significantly; （2） Leadership affects good governance significantly; （3） Leadership affects internal satisfaction significantly; （4） Performance management affects internal satisfaction; （5） Good governance significantly affects external satisfaction; （6） Internal satisfaction does not affect external satisfaction. Based on the findings in this research, it is suggested that the study programs take into account the implementation of performance management in order to undertake improvement continuously considering that performance management supports the quality assurance activity. It is also suggested that the faculty implements good governance formally. However, the implementation should empower the study program to undertake the improvement.