Essays on Voluntary Contribution with Private Information and Threshold Uncertainty
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This dissertation concerns individual voluntary contributions in the subscription game with three important model considerations: private information on public good valuations, threshold uncertainty and the timing of the contribution — simultaneous and sequential contribution. In the first essay, we set up a simultaneous subscription game model and analyze how the contributions will be affected when individuals face different levels of threshold uncertainty. Comparative statics with respect to the changes in the cost distribution are derived. We find that when the cost of public good increases in the sense of first order stochastic dominance, individuals, on average, are more willing to contribute to the public good. But, when the cost distribution becomes more dispersed in the sense of mean-preserving spread, individuals, on average, are less willing to contribute to the public good. The second essay introduces threshold uncertainty and private information on valuations for a discrete public good in a subscription game and analyzes how the players sequentially make their contribution decisions within this environment. I find that the earlier contributor’s expected contribution is lower than the latter contributor’s expected contribution. The result demonstrates that the earlier contributor can free ride off the latter contributor. Comparing the expected total contribution in the sequential contribution mechanism with that in the simultaneous contribution mechanism, this paper shows that the expected total contribution in the sequential model is lower. The third essay provides the experimental evidence of comparative statics with respect to the changes in the cost distribution. I conduct a laboratory experiment to test the theoretical predictions in the first essay. The experimental result supports the theoretical predictions of the comparative statics with respect to the threshold uncertainty: decreasing the degree of the threshold uncertainty in the sense of mean-preserving contraction, or increasing the mean of the threshold distribution in the sense of first-order stochastic dominance, individuals, on average, are more willing to contribute to the public good.
Peng, Hui-Chun (2014). Essays on Voluntary Contribution with Private Information and Threshold Uncertainty. Doctoral dissertation, Texas A & M University. Available electronically from