Changes in the Threshold Uncertainty in a Simultaneous Subscription Game

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.

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Gronberg, T. and Peng, H. (2014) Changes in the Threshold Uncertainty in a Simultaneous Subscription Game. Theoretical Economics Letters, 4, 263-269. doi: 10.4236/tel.2014.44036.

Conflicts of Interest

The authors declare no conflicts of interest.

References

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