TITLE:
Changes in the Threshold Uncertainty in a Simultaneous Subscription Game
AUTHORS:
Timothy J. Gronberg, Hui-Chun Peng
KEYWORDS:
Discrete Public Good, Threshold Uncertainty, Private Information
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.4,
April
24,
2014
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.