The implications of risk and uncertainty aversion in public goods games

Public sector Australia

This paper examines how individuals behave in situations of risk and uncertainty in public and private goods context.

It finds that subjects are willing to pay a much higher amount to find out information relating to the probabilities of providing the private good than information relating to the public good even if this information has greater consequences for the individual in he public goods context. It finds strong support for the free-rider hypothesis and extend it to cases when risk and uncertainty are present. The paper concludes that subjects treat risks and uncertainties associated with the provision of private good and public good differently.

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