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Published March 4, 2016 | Accepted Version
Report Open

The Dynamic Free Rider Problem: A Laboratory Study


We report the results from an experiment designed explicitly to study the Markov Perfect Equilibrium (MPE) dynamics of free riding behavior in the accumulation of a durable public good. We consider two cases: economies with reversibility (RIE), where the agents can either increase or decrease the accumulated stock; and economies with irreversibility (IIE), where contributions are non-negative. Our findings support the key qualitative prediction of MPE: IIE converges to an accumulated level of public good that is an order of magnitude higher than RIE. We also find that the accumulation path is inefficiently slow in both RIE and IIE, and the public good is significantly under-provided.

Additional Information

January 2013. We are grateful for comments from seminar audiences at Bocconi University, University of Chicago, University of Melbourne, University of California San Diego, the 2009 International CAS/NES Workshop on Rationality, Behaviour and Experiments in Moscow, the 2009 Wallis Conference in Rochester, the Conference on Theory and Field Experiments in Political Economy at Harvard University, the Australian Public Choice Conference 2009 in Melbourne, and the 2010 Winter Meeting of the Econometric Society in Atlanta. We thank Lydia Mechtenberg for detailed comments. Battaglini gratefully acknowledges financial support from NSF (SES-0418150) and the Alfred P. Sloan Foundation. Nunnari and Palfrey gratefully acknowledge financial support of grants from the National Science Foundation (SES-0617820, and SES-0962802) and the Gordon and Betty Moore Foundation. Dustin Beckett provided valuable research assistance.

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Accepted Version - sswp_1371.pdf


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