Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93985
Authors: 
Gerber, Anke
Wichardt, Philipp C.
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 194
Abstract: 
This paper proposes a simple mechanism aimed to establish positive contributions to public goods in the absence of powerful institutions to sanction free-riders. The idea of the mechanism is to require players to commit to the public good by paying a deposit prior to the contribution stage. If all players commit in this way, those players who do not contribute their share to the public good forfeit their deposit. If there is no universal commitment, all deposits are refunded and the standard game is played. Given deposits are sufficiently high, prior commitment and full ex post contributions are part of a strict subgame perfect Nash equilibrium for the resulting game. As the mechanism obviates the need for any ex post prosecution of free-riders, it is particularly suited for situations where players do not submit to a common authority as in the case of international agreements.
Subjects: 
public goods
cooperation
institutions
Climate-Change Treaties
JEL: 
C72
D61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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