The Dynamic Free Rider Problem: A Laboratory Study

Creators: Battaglini, Marco; Nunnari, Salvatore; Palfrey, Thomas R.

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Abstract

We report the results of an experiment that investigates free riding in the accumulation of durable public goods. We consider economies with reversibility, where contributions can be positive or negative; and economies with irreversibility, where contributions are nonnegative. Aggregate outcomes support the qualitative predictions of the Markov Perfect Equilibria (MPE) characterized in Battaglini, Nunnari, and Palfrey (2014): steady state levels of public good are lower with reversibility than irreversibility; accumulation is inefficiently slow; and the public good is under-provided in both regimes. On the other hand, public good levels are higher than MPE, and some evidence of history dependence is detected.

Additional Information

© 2016 American Economic Association. We are grateful for comments from a number of seminar audiences at universities and conferences. We thank Lydia Mechtenberg and Steven Matthews for valuable comments. Battaglini gratefully acknowledges financial support from NSF (SES-0418150) and the Alfred P. Sloan Foundation. Palfrey gratefully acknowledges financial support of grants from the National Science Foundation (SES-0962802, SES-1426560), the Gordon and Betty Moore Foundation (SES-1158), and the Russell Sage Foundation. Dustin Beckett and Anselm Rink provided valuable research assistance.

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