Contingent Reasoning and Dynamic Public Goods Provision

Abstract

Contributions toward public goods often reveal information that is useful to others considering their own contributions. This experiment compares static and dynamic contribution decisions to determine how contingent reasoning differs in dynamic decisions where equilibrium requires understanding how future information can inform about prior events. This identifies partially cursed individuals who can only extract partial information from contingent events, others who are better at extracting information from past rather than future or concurrent events, and Nash players who effectively perform contingent thinking. Contrary to equilibrium, the dynamic provision mechanism does not lead to lower contributions than the static mechanism. (JEL C92, D71, D82, D91, H41)