Asset Markets and Equilibrium Selection in Public Goods Games with Provision Points: An Experimental Study |
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| Authors: | Bruno Broseta Enrique Fatas Tibor Neugebauer |
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| Affiliation: | Broseta;: Director, Red de Institutos Tecnológicos de la Comunidad Valenciana (REDIT), Colón 66, 46004 Valencia, Spain. Phone 34–961–961–262, Fax 34–961–961–260, E-mail Fatas;: Associate Professor, LINEEX and Universitat de València, Facultad de Economía, Campus Tarongers, 46022 Valencia, Spain. Phone 34–963–828–463, Fax 34–963–828–415, E-mail Neugebauer;: Assistant Professor, LINEEX and Universität Hannover, Lehrstuhl Finanzmarkttheorie, Königsworther Platz 1, D-30167 Hannover, Germany. Phone 49–511–762–5161, Fax 49–511–762–5240, E-mail |
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| Abstract: | We report experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and individual behavior. Auctioning off such a right among a larger population of players strikingly enhances public good provision. Once public good provision is obtained, the auction price at the preliminary stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. Individual deviations from the equilibrium strategy are neither able to force lower market prices nor to affect provision of the public good in subsequent periods. (JEL C72 , C92 , H41 ) |
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