Public Good and Private Good Valuation for Waiting Time Reduction - A Laboratory Study

Abstract

In a laboratory experiment with salient rewards, subjects were endowed with money and waiting time. Preferences for waiting time were elicited both as a private good by means of a series of second price auctions, i.e., in a non-induced values framework, and as a public good in the scope of a voluntary contribution game. Our data supports the Lindahl equilibrium as a descriptive model of behavior. Private goods valuations turned out to be good predictors of public goods valuations. Furthermore, positive expectations about other subjects' contributions lead to a significant increase of one's own contribution. We did not find evidence of waiting time being discounted.

Keywords: Private Provision of Public Goods, Nash Equilibrium, Lindahl Equilibrium, Conditional Cooperation, Experiments, Second Price Auction

JEL Classification: H41, D61, C90