Public goods with ambiguity in large economies
NR Kocherlakota, Y Song - Journal of Economic Theory, 2019 - Elsevier
We consider a canonical problem in economics: the financing and provision of a public
good. Mailath and Postlewaite (1990) show that under natural information and enforcement
frictions, the probability of providing the public good falls to zero as the population size goes
to infinity even if provision of the public good is efficient. In this paper, we allow agents to
have multiple prior beliefs about others' valuations and to make choices that reflect their
aversion to that ambiguity. We show that, as long as each agent's set of priors contains some …
good. Mailath and Postlewaite (1990) show that under natural information and enforcement
frictions, the probability of providing the public good falls to zero as the population size goes
to infinity even if provision of the public good is efficient. In this paper, we allow agents to
have multiple prior beliefs about others' valuations and to make choices that reflect their
aversion to that ambiguity. We show that, as long as each agent's set of priors contains some …
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