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Public Goods, Social Norms and Naive Beliefs

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Abstract

An individual's contribution to a public good may be seen by others as a signal of attributes such as generosity or wealth. An individual may, therefore, choose their contribution so as to send an appropriate signal to others. In this paper, we question how the inferences made by others will influence the amount contributed to the public good. Evidence suggests that individuals are naïve and biased toward taking things at “face value.” We contrast, therefore, contributions made to a public good if others are expected to make rational inferences versus contributions if others are expected to make naïve inferences.

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Original languageEnglish
Pages (from-to)199-223
Number of pages25
JournalJournal of Public Economic Theory
Volume12
Issue number2
Early online date28 Mar 2010
DOIs
Publication statusPublished - Apr 2010
Peer-reviewedYes

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