EXPERIMENTAL ANALYSIS OF RISK AND UNCERTAINTY IN PROVISIONING PRIVATE AND PUBLIC GOODS |
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| Authors: | LATA GANGADHARAN VERONIKA NEMES |
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| Affiliation: | Gangadharan:;Associate Professor, Department of Economics, University of Melbourne, VIC 3010, Australia. Phone 61-3-8344-5408, Fax 61-3-8344-6899, E-mail
Nemes:;Research Associate, Department of Economics, University of Melbourne, VIC 3010, Australia. Phone 61-3-8344-5410, Fax 61-3-8344-6899, E-mail and Senior Economist, Department of Sustainability and the Environment, VIC 3002, Australia. Phone 61-3-9637-8804, E-mail |
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| Abstract: | This paper uses laboratory evidence from public goods games to examine how in payoff-equivalent situations, decision makers contribute toward private or public goods when they are exposed to different kinds of risks and uncertainties in the provision of these goods. We find that location matters with subjects moving away from the environmental uncertainty in favor of strategic uncertainty when that uncertainty is located on the private good. When the uncertainty relates to the public good, subjects face both kinds of uncertainties on the same good, leading to a significant drop in contributions. An opportunity to reduce uncertainty increases cooperation. ( JEL C90, D81, H41) |
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