General Seminar - Yunjie Shi

Waiting and Preemption in Public Good Contributions

Abstract: We study the private provision of a threshold public good by two players who learn its quality from private signals arriving over time. The first contribution plays two strategic roles: its timing conveys information about whether the first mover has received good news, while its amount allocates the funding burden between the first mover and the follower. Taking the first-contribution amount as exogenous, we characterize the trade-off between the informational value of waiting and the incentive to secure provision. This tension gives rise to three distinct equilibrium patterns: separation, in which only players with good news initiate; preemption, in which uninformed players race to contribute at the outset; and pooling, in which players with good news wait until the same contribution becomes sufficiently credible to induce an uninformed follower to complete the project, while uninformed players also initiate with positive probability at that time. Finally, we show that the first-contribution amount can serve as a design instrument. By reallocating the funding burden across contribution positions, a fundraiser can implement the welfare-maximizing allocation among the equilibrium paths we characterize: immediate provision when delay is sufficiently costly, and provision after good news when learning is sufficiently valuable, thereby attaining the single-decision-maker welfare benchmark.