The Role of Endogenous Payoff Over Public Coordination Equilibrium

This paper studies how the threat of a protest influences government spending. The government has to choose a policy to maximize its payoff, which depends on (1) the policy itself and (2) the protest's outcome. {Citizens observe the policy choice and a private signal before deciding simultaneously whether to protest.} We provide an equilibrium in which citizens coordinate only in {public information, and show that if, in addition to the protest's outcome, the payoff of the government depends on its size, the set of equilibrium strategies is a proper subset