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Free keywords:
Dynamic Volunteer’s dilemma, Present bias, Hyperbolic discounting, Strotz-Pollak equilibrium, Time inconsistency
Abstract:
We study a dynamic volunteering dilemma game in which two players choose to volunteer or wait given there have not been any volunteering actions in the past. The players can be procrastinators and the benefits of volunteering arrive later than the costs. We fully characterise the stationary Strotz-Pollak equilibria. When the cost of volunteering is sufficiently small or agents’ present-bias parameters are sufficiently close, there always exists an equilibrium in which both players randomise. This equilibrium features stochastic delay and the delay is exacerbated if one or both agents become more present-biased. However, if the agents differ significantly in their present-bias parameters, this difference may act as a ‘natural’ coordination device and the unique stationary equilibrium predicts that only the less severe procrastinator volunteers, this may result in an even quicker provision compared with the case of two exponential discounters.
