Bray Theory Workshop

Abstract:

We examine coordination in private provision of public goods when agents' contributions are complementary.  When complementarity is sufficiently high an additional full-contribution equilibrium emerges.  We experimentally investigate subjects' behavior using a between-subject design that varies complementarity.  When two equilibria exists, subjects coordinate on the full-contribution equilibrium.  When complementarity is sizable but only a zero-contribution equilibrium exists, subjects persistently contribute above it.  Choice and non-choice data reveal heterogeneity among subjects and two distinct types. Homo pecuniarius maximizes profits by best-responding to beliefs, while Homo behavioralis indentifies this strategy but chooses to deviate from it – sacrificing pecuniary rewards to support altruism or competitiveness.