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.
Highlights
Overcontribution in linear public good games represents one of the best documented and replicated regularities in experimental economics
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
We build and estimate a quantal response equilibrium (QRE [1]) extension of the model presented by Corazzini et al [2]
Summary
Overcontribution in linear public good games represents one of the best documented and replicated regularities in experimental economics. The explanation of this apparently irrational behaviour, is still a debate in the literature. This paper is aimed at investigating the relative importance of noise versus preference for efficiency In this respect, we build and estimate a quantal response equilibrium (QRE [1]) extension of the model presented by Corazzini et al [2]. We build and estimate a quantal response equilibrium (QRE [1]) extension of the model presented by Corazzini et al [2] This boundedly rational model formally incorporates both preference for efficiency and noise. In contrast to other studies that investigate the relative importance of error and other-regarding preferences, the QRE approach explicitly applies an equilibrium analysis
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