Changes in the Threshold Uncertainty in a Simultaneous Subscription Game

Timothy J. Gronberg, Hui-Chun Peng

Department of Economics, Texas A&M University, College Station, USA.

DOI: 10.4236/tel.[phone]                

Abstract

This paper considers a discrete public good subscription game under threshold uncertainty and private information on valuations and analyzes the effect of change in cost uncertainty on the private contribution equilibrium under a simultaneous institution. Comparative statics with respect to the changes in the cost distribution are derived. We find that if the cost distribution becomes more dispersed, in the sense of a mean-preserving spread, the expected total contributions to the public good will decrease. Our proposition provides a policy implication that if the suppliers are able to reduce the uncertainty of the cost distribution, the private contribution to the public good will increase.

Keywords

Discrete Public Good, Threshold Uncertainty, Private Information

Conflicts of Interest

The authors declare no conflicts of interest.

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