Bayesian Equilibrium in a Public Good Economy |
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Authors: | SHLOMIT HON‐SNIR BENYAMIN SHITOVITZ MENAHEM SPIEGEL |
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Affiliation: | 1. Shlomit Hon‐Snir, Department of Economics, The Max Stern Academic College of Emek Yezreel, Emek Yezreel 19300, Israel (shlomith@yvc.ac.il).;2. Benyamin Shitovitz, Department of Economics, University of Haifa, Mount Carmel, Haifa 31905, Israel (binya@econ.haifa.ac.il).;3. Menahem Spiegel, Department of Finance and Economics, Rutgers Business School, Newark, NJ 07102 USA (mspiegel@rbs.rutgers.edu). |
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Abstract: | This paper studies the provision of a public good via voluntary contributions in an economy with uncertainty and differential information. Consumers differ in their private information regarding their future endowment as well as in their preferences. Each consumer selects her consumption ex ante, i.e., before knowing the state of nature. Contributions to the provision of the public good are determined ex post, i.e., when the state of nature is realized. Assuming that some normality conditions hold, a Bayesian equilibrium exists. Further, equilibrium is unique, regardless of the number of consumers, when either (1) the information partitions of consumers can be ranked from the finest to the coarsest, or (2) there are only two types of consumers. |
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