Estimating heterogeneous contributing strategies in threshold public goods provision: A structural analysis

Abstract We analyze a structural model of threshold public goods contributions, where the public good is provided only if the aggregated contributions reach or surpass the predetermined cost; otherwise contributions will be returned to individuals. Based on individual contributions to a public good in multiple periods, we are able to identify the number of contributing strategies, functional form for each strategy and the transition probabilities of contributing strategies conditional on the previous provision outcomes. The result of the constructive identification suggests a multi-step procedure to estimate the model primitives. Monte Carlo results illustrate that the procedure works well in practice. We apply the methodology to the experimental data we collected and show that subjects strategically respond to provision history by making an adjustment based on their preceding contributing strategies. We also find that subjects are more likely to adjust contribution strategies upon provision failures.

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