Chapter 86 Explaining the Comparative Statics in Step-Level Public Good Games

The step-level public good game differs strategically from the linear public good game. In the one-shot linear public good game the dominant strategy is not to contribute. In the one-shot step-level public good game multiple Nash equilibria exist. An inefficient Nash equilibrium involves nobody contributing. There are efficient Nash equilibria in pure strategies where 3 of the n players contribute (i.e., there are exactly enough contributions to reach the threshold). A rational player maximizing expected value will contribute if and only if she estimates the probability that her contribution will be critical for the provision of the public good to be sufficiently high. This chapter distinguishes individual preferences (allowing them to be non-selfish) and individual beliefs about the behavior of others. Both beliefs and preferences are important building blocks for most theories explaining behavior in games.