Provision of step-level public goods with uncertain provision threshold and continuous contribution

Common to most theoretical and empirical research on public goods is the as sumption that the parameters of the game are common knowledge. Recent theor etical and empirical studies have questioned this assumption by arguing tha t many public goods situations are characterized by uncertainty regarding v arious aspects of the situation. In particular, Suleiman (1997) argued that members of production groups of step-level public goods are often uncertai n about the value of the provision threshold. For this type of uncertainty he proposed three distinct models to account for the individual's contribut ion. The present study reports the results of an experiment designed primarily t o test and contrast the predictions derived from two of these models - a su bjective expected utility model and a cooperative model - regarding the eff ects of threshold uncertainty on contribution for the provision of step-lev el public goods. Other goals of the study were to test the joint effect of the threshold uncertainty level, and its mean (low vs. high), on contributi on, and to examine the effect of threshold uncertainty on the individuals' estimates regarding the contributions of other group members. The results show that the effect of threshold uncertainty is moderated by t he threshold mean: Contribution to the public good increased as a function of uncertainty for the lower threshold mean, and decreased (though not sign ificantly) for the higher threshold mean. In contrast, for the two threshol d means the subjects' estimates of the mean and variability of others' cont ribution increased with threshold uncertainty. The models' comparison revea led that the cooperative model was superior to the subjective expected util ity model. This result adds to a substantial body of research on social dil emmas showing that under conditions of social (strategic) uncertainty, grou p members tacitly coordinate their choice behavior by anchoring their decis ions on rules of fairness.