Preference for Efficiency or Confusion? A Note on a Boundedly Rational Equilibrium Approach to Individual Contributions in a Public Good Game. (1st September 2015)

• Record Type: Journal Article
• Authors: Corazzini, Luca; Tyszler, Marcelo
• Other Names: Fotakis Dimitris Academic Editor.
• Is Part Of: Journal of applied mathematics. Volume 2015(2015)
• Publication Date: 2015-09-01
• Subjects: Mathematics -- Periodicals; 519.05
• DOI: 10.1155/2015/961930
• Languages: English
• ISSNs: 1110-757X

Abstract

Abstract : By using data from a voluntary contribution mechanism experiment with heterogeneous endowments and asymmetric information, we estimate a quantal response equilibrium (QRE) model to assess the relative importance of efficiency concerns versus noise in accounting for subjects overcontribution in public good games. In the benchmark specification, homogeneous agents, overcontribution is mainly explained by error and noise in behavior. Results change when we consider a more general QRE specification with cross-subject heterogeneity in concerns for (group) efficiency. In this case, we find that the majority of the subjects make contributions that are compatible with the hypothesis of preference for (group) efficiency. A likelihood-ratio test confirms the superiority of the more general specification of the QRE model over alternative specifications.