The ‘Art City’ as A Local Public Good: The Strategic Interplay between Private Donors and Arts Organizations

Abstract

In this paper we set up a simple evolutionary game-theoretic model aimed at addressing the issue of ‘art cities’ promotion and preservation over time via simultaneous commitment of nonprofit actors such as private donors and arts organizations. Two classes of agents are assumed to interact strategically in a ‘double critical mass’ model where the provision and maintenance, on voluntary bases, of a public-type good such as an art city is concerned. Uncertainty as to equilibrium outcomes emerges in that, within both categories, a positive proportion of agents face the temptation to opportunistically free ride on others’ efforts. Further, private donors’ and arts organizations’ payoff functions are interdependent, in the sense that (a) potential donors decide to be actual donors only insofar as a ‘large enough’ proportion of arts organizations provide a high effort level – otherwise they act as free riders; (b) arts organizations prefer to exert a high productive effort only insofar as a ‘large enough’ proportion of potential donors act as actual donors – otherwise they exert a low effort level. Through this analytical framework, we are able to focus on the critical factors affecting the dynamic outcome of the local interaction under study. Under certain conditions, in a medium-long run perspective, even art cities where, initially, either a large proportion of agents behave as free riders or a large proportion of arts organizations exert a low effort level may manage to survive and flourish.