Using data from a repeated public good game, I conduct a Granger causality test and find that contributions and beliefs about the contributions of others decline together,with neither variable leading the other. As a result, I model contributions and beliefs using a system of simultaneous equations. Estimating the system provides evidence on the magnitude of the projection bias. Since contributions and beliefs move together, indicating that current and/or past values of one series are not useful for predicting future values of the other, I develop and test the hypothesis that contribution heterogeneity predicts changes in average contributions. I find support for my hypothesis using data from a variety of public good game experiments (with and without belief elicitation; fixed and random matching).

Creator

• Smith, Alexander

Identifier

• 2014-002

Palavra-chave

• Simultaneous Equations
• Public Good Game
• Granger Causality

Date created

• 2/13/13

Resource type

• Article

Extent

• 23 pages

Rights statement

• In Copyright

Última modificação

• 2020-09-21