The role of risk aversion in public goods dilemmas with environmental uncertainty: an experimental analysis


Secilmis E.

APPLIED ECONOMICS LETTERS, vol.26, no.17, pp.1434-1438, 2019 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 26 Issue: 17
  • Publication Date: 2019
  • Doi Number: 10.1080/13504851.2019.1576852
  • Journal Name: APPLIED ECONOMICS LETTERS
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.1434-1438
  • Keywords: Experiment, public goods, risk aversion, environmental uncertainty, PROVISION, THRESHOLD

Abstract

The purpose of this study is to extend earlier research on environmental uncertainty in public goods dilemmas. The present paper reports the results of an experiment designed to examine the effect of risk aversion on public goods provision. A von Neumann-Morgenstern utility function with constant coefficient of relative risk aversion is used to investigate the impact of risk attitudes within a threshold public goods environment. The outcome of the threshold public goods experiment shows that subjects are indifferent to the changes in environmental conditions. Additionally, the analysis indicates that risk aversion is a significant determinant of voluntary public goods contribution level.