Positional and conformist effects in voluntary public good provision

Abstract

AbstractThe literature featuring game–theoretical models aimed at explaining the effect of the status concerns on the voluntary provision of a public good is generally focused on snob agents, driven by a desire for exclusiveness. However, the social context literature highlights that status concerns can give rise to a desire, in some individuals to be different from the “common herd,” and in some others to conform with other people. We analyze a two‐player public good game under two different settings: The standard case with two positional players (PPs), versus the case in which the positional player faces a conformist player (PC). Giving entrance to conformism has two main implications. Strong status concerns by both players can lead to a virtuous cycle in which the conformist player wishes to imitate the contributing behavior of the positional player, and the latter wishes to increase contribution to distinguish herself from the former. Then, the contribution to the public good can be higher than in the case with only snob agents. This higher contribution can increase social welfare, but only if endowments are not too large and the status concern of the positional player is not excessively high.