A Test of Dominant Assurance Contracts

A Test of Dominant Assurance Contracts - Marginal REVOLUTION: " In an assurance contract people pledge to fund a public good if and only if enough others pledge to fund the public good."



'via Blog this'

1. In an assurance contract people pledge to fund a public good if and only if enough others pledge to fund the public good.
2. Since no money is paid unless the total pledges are high enough to fund the public good, assurance contracts remove the fear that your contribution will be wasted
3. What a dominant assurance contract adds is that the entrepreneur agreeing to produce the public good if k or more pledge also agrees that if fewer than k pledge he will pay a prize to those who did pledge.
4.