Voluntary participation in public goods provision with Coasian bargaining

Fuhai HONG, Wooyoung LIM

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

2 Citations (Scopus)

Abstract

This paper reports findings from an experimental study of voluntary participation games, as considered by Dixit and Olson (2000). The voluntary participation game consists of two stages: a non-cooperative participation decision followed by Coasian bargaining on public goods provision only among those who choose to participate. Our experimental findings show that, consistent with the theoretical findings of Dixit and Olson, the outcome of this game falls short of full efficiency. However, we find that voluntary participation undermines the Coase Theorem to a lesser extent than predicted by Dixit and Olson, particularly with larger numbers of players. We also investigate the effect of pre-play communication on the public goods provision and find little evidence that cheap talk helps subjects coordinate on the efficient outcome of coalition formation in the laboratory.
Original languageEnglish
Pages (from-to)102-119
Number of pages18
JournalJournal of Economic Behavior and Organization
Volume126
Issue numberPart A
Early online date10 Mar 2016
DOIs
Publication statusPublished - Jun 2016
Externally publishedYes

Fingerprint

Voluntary participation
Communication
Participation
Cheap talk
Coase theorem
Coalition formation
Experimental study

Bibliographical note

Authors gratefully acknowledge financial support provided by Shanghai University of Finance and Economics and a start up grant of Nanyang Technological University.

Keywords

  • Coase Theorem
  • Laboratory experiments
  • Public goods
  • Voluntary participation

Cite this

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Voluntary participation in public goods provision with Coasian bargaining. / HONG, Fuhai; LIM, Wooyoung.

In: Journal of Economic Behavior and Organization, Vol. 126, No. Part A, 06.2016, p. 102-119.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AU - LIM, Wooyoung

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AB - This paper reports findings from an experimental study of voluntary participation games, as considered by Dixit and Olson (2000). The voluntary participation game consists of two stages: a non-cooperative participation decision followed by Coasian bargaining on public goods provision only among those who choose to participate. Our experimental findings show that, consistent with the theoretical findings of Dixit and Olson, the outcome of this game falls short of full efficiency. However, we find that voluntary participation undermines the Coase Theorem to a lesser extent than predicted by Dixit and Olson, particularly with larger numbers of players. We also investigate the effect of pre-play communication on the public goods provision and find little evidence that cheap talk helps subjects coordinate on the efficient outcome of coalition formation in the laboratory.

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