Waiting and Preemption in Public Good Contributions

Speaker: Yunjie Shi

Affiliation: University of Auckland

Location: Room 214, Chamberlain Building (#35), St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: We study threshold public-good provision when two players gradually learn the quality of a common project. The first contribution serves two strategic roles: its timing conveys information about the first mover’s learning status, while its amount allocates the funding burden between the first mover and the follower. With an exogenously prescribed first contribution, we establish a separating equilibrium, in which only players with good news contribute first, and a preemption equilibrium, in which uninformed players contribute at the outset. We also establish a gradual contribution equilibrium, in which uninformed contribution occurs over time before eventually giving way to separation. We further identify a distinct form of strategic delay in a pooling equilibrium: a player who receives good news optimally waits until the same contribution becomes sufficiently credible to induce completion, at which point uninformed players also contribute with positive probability. Finally, we show that the first contribution can serve as a design instrument: by choosing it appropriately, the fundraiser can eliminate the welfare-inferior equilibrium paths and attain the first-best welfare benchmark achieved by a centralized decision maker.