Voluntary Provision Of Public Goods Research Articles

Positional and conformist effects in voluntary public good provision

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.

Collective minimum contributions to counteract the ratchet effect in the voluntary provision of public goods

We experimentally test a theoretically promising amendment to the ratchet-up mechanism of the Paris Agreement. The ratchet-up mechanism prescribes that parties’ commitments to the global response to climate change cannot decrease over time, and our results show that its effect is detrimental. We design a public goods game to study whether cooperation is promoted by an amendment to the mechanism that stipulates that all agents must contribute at least a collectively chosen minimum based on the principle of the lowest common denominator. We find that binding collective minimum contributions improve the effectiveness of the ratchet-up mechanism. Non-binding minimum contributions, by contrast, do not encourage cooperation. Our data indicate that the difference is attributable to conditional cooperative dynamics. If other participants contribute less than the collective minimum contribution, even initially cooperative participants start to negatively reciprocate this form of non-compliance by contributing less.

Endogenous timing and income inequality in the voluntary provision of public goods: Theory and experiment

AbstractThis study theoretically and experimentally investigates the effects of income inequality on donors' decisions regarding timing choices and contributions to public goods when contribution timing is endogenously chosen by contributors. To this end, we use the conventional voluntary provision models of Warr (1983) and Bergstrom, Blume and Varian (1986), with Cobb–Douglas preferences augmented with a two‐stage game of Hamilton and Slutsky (1990). The following results were obtained and experimentally confirmed. First, when the distribution of income is extremely unequal, donors are indifferent between the simultaneous and sequential moves in the contribution game. Second, as income inequality is decreased, the simultaneous‐move contribution game is likely to emerge because every donor prefers to act as a leader. Nevertheless, a higher‐income donor may also prefer to act as a follower without specific social preferences and uncertainty regarding the quality of public goods. Third, most theoretical predictions regarding timing decisions are supported in our laboratory experiment, provided that the participants had enough time to learn the consequences of their timing choices.

Mixed Market Structure and R &D: A Differential Game Approach

We consider a dynamic model of an industry consisting of a few large firms, which can manipulate the market outcome, and a mass of small enterprises, each of which has a negligible impact on the market. The production costs of the respective firms depend on the stock of knowledge capital, which accumulates over time through research and development (R &D) investment made by large firms. The model is a variant of the differential game of voluntary provision of public goods, but in contrast to previous studies, we focus on the interaction between market competition and dynamic game outcomes. We derive both open-loop and Markov-perfect Nash equilibria. There exists a unique open-loop Nash equilibrium. By contrast, depending on the parameters of the model, there can be two linear Markov-perfect Nash equilibria. We also examine the short- and long-run effects of a change in the number of large firms. An increase in the number of large firms unambiguously harms both types of firms in the short run but may benefit them in the long run. In the open-loop Nash equilibrium, the relationship between the number of large firms and the steady-state stock of knowledge capital is inverted-U shaped. Concerning the Markov-perfect Nash equilibria, the effect of increased competition from large firms depends on the specific feedback strategy chosen in equilibrium.

Bridging the Gap: The Role of the Charity in Voluntary Public Good Provision

Abstract This paper investigates how donors to food assistance charities respond to exogenous changes in recipients’ unmet needs. When food insecurity rises by one percentage point, the average food assistance charity increases fundraising by 0.9 %. Without this response, private contributions would have fallen by at least 0.2 %. These results are consistent with a model in which economic inequality simultaneously raises the donor’s marginal benefit of giving and reduces their awareness of the recipient’s circumstances. Charitable fundraising plays a key role in maintaining the charity’s revenues at a time when they are most needed.

Bad apples in symmetric repeated games

We study large‐population repeated games where players are symmetric but not anonymous, so player‐specific rewards and punishments are feasible. Players may be commitment types who always take the same action. Even though players are not anonymous, we show that an anti‐folk theorem holds when the commitment action is “population dominant,” meaning that it secures a payoff greater than the population average payoff. For example, voluntary public goods provision in large populations is impossible when commitment types never contribute, even if monetary rewards can be targeted to contributors; however, provision is possible if noncontributors can be subjected to involuntary fines. A folk theorem under incomplete information provides a partial converse to our result. Along the way, we develop some general results on symmetric games with incomplete information and/or repeated play.

The purity of impure public goods

AbstractIn this paper, we provide a new perspective on the links between the analysis of the voluntary provision of pure and impure public goods. In particular, it is shown that the impure public good model can be transformed into a pure public good one. This innovative method not only leads to new comparative statics results, but also provides new insights on the impure public good model, for example, on causes of the nonneutrality of income transfers with regard to Nash equilibria in the impure public good case.

An (un)healthy social dilemma: a normative messaging field experiment with flu vaccinations

BackgroundInfluenza seasons can be unpredictable and have the potential to rapidly affect populations, especially in crowded areas. Prior research suggests that normative messaging can be used to increase voluntary provision of public goods, such as the influenza vaccine. We extend the literature by examining the influence of normative messaging on the decision to get vaccinated against influenza.MethodsWe conduct a field experiment in conjunction with University Health Services, targeting undergraduate students living on campus. We use four posters, randomized by living area clusters to advertise flu vaccination clinics during the Fall. The wording on the posters is varied to emphasize the individual benefits of the vaccine, the social benefits of the vaccine or both benefits together. We collect survey data for those vaccinated at the vaccination clinics, and for those not vaccinated via an online survey.ResultsWe find that any normative message increases the percentage of students getting the flu vaccine compared with no message. In terms of the likelihood of getting the flu vaccine, emphasizing both the individual and social benefits of vaccination has the largest increase in the vaccination rate (19–20 percentage point increase). However, flu vaccinations did not reach the herd immunity threshold (70% of students vaccinated).ConclusionsThis study provides evidence that there is a pro-social component that is relevant in individual vaccination decisions which should be accounted for when designing vaccination campaigns. The results of this normative, pro-social messaging experiment could be extended to other at-risk communities where the number of background risks is much larger. This is especially relevant nowadays, as other seasonal vaccines are being rolled out and younger adults are the ones with the lowest uptake.

Efficiency and group size in the voluntary provision of public goods with threshold preference

What is the optimal group size in the voluntary provision of public goods in a purely altruistic economy? The popular consensus on this fundamental question is that the free-rider problem worsens as the group size increases. This study provides a counterexample of the consensus by featuring plausible threshold preferences for certain typical public goods. Under these preferences, marginal utility hardly diminishes below a threshold level, but declines significantly in close proximity to the threshold and nearly drops to zero above the threshold. We find that threshold preferences significantly reduce inefficiency. We also show that if marginal costs increase, then the threshold preferences lead to a partly positive relationship between efficiency and group size, which allows us to detect the locally efficient group size. Moreover, the locally efficient group size is proportional to the slope of the marginal costs as well as the threshold of marginal utility.

Do social norms trump rational choice in voluntary climate change mitigation? Multi-country evidence of social tipping points

The rational choice model of voluntary public good provision predicts that an individual's contribution to climate change mitigation responds negatively to larger contributions by others whereas social norm theory maintains that one's own contribution is positively related to that of others. This paper tests the competing hypotheses empirically using representative data for about 30,000 individuals from 23 European countries. The paper finds that, up to a threshold percentage of others perceived to engage in mitigation, individuals' willingness to engage in mitigation themselves is lower the more other individuals are perceived to engage in such behavior, whereas the relationship is positive when the threshold is passed. Since the actual percentage of others perceived to engage in mitigation is lower than the estimated threshold (30 to 56%) in a number of countries, marginal increases in the percentage of others perceived to behave in a climate-friendly way may backfire by enhancing free-rider behavior. For the social norm to take grip, policy-induced non-marginal increases of perceptions may be required to shift the system past the tipping point.

Existence, uniqueness, and comparative statics of Nash equilibrium in a game of voluntary public good provision with two public goods

AbstractThis paper shows the uniqueness of a Nash equilibrium in the presence of many heterogeneous players with two public goods under Cobb–Douglas preferences. It provides a sufficient condition for a unique equilibrium including contributors providing both public goods, and shows that contributors providing both public goods appear frequently. This uniqueness property allows us to conduct a comparative statics analysis with a contributor and a free rider of both public goods, showing the role of the contributor providing both public goods.

Collective Minimum Contributions to Counteract the Ratchet Effect in the Voluntary Provision of Public Goods

Collective Minimum Contributions to Counteract the Ratchet Effect in the Voluntary Provision of Public Goods

Collective Minimum Contributions to Counteract the Ratchet Effect in the Voluntary Provision of Public Goods

Collective Minimum Contributions to Counteract the Ratchet Effect in the Voluntary Provision of Public Goods

Bridging the Gap: The Role of the Charity in Voluntary Public Good Provision

Bridging the Gap: The Role of the Charity in Voluntary Public Good Provision

Incentives for the over-provision of public goods

A wide range of public goods, such as open source software, possess two often-ignored features: (i) excludable and potentially rivalrous contribution benefits (e.g. status seeking) and (ii) nonexcludable and nonrival consumption costs (e.g. adoption costs). I develop a model of the voluntary provision of public goods that incorporates these features. I find that these additional features mitigate the well-known incentive problems, but introduce new ones. Costly consumption lessens the free-rider problem, leading to more efficient provision. Private benefits similarly reduce the free-rider problem, but can lead to over-provision via a negative congestion externality on the supply side. Status-seeking induces an increase in contributions to the benefit of each contributor but imposes a cost on all other consumers and contributors. Efforts to maximize welfare by a community leader or social planner often involve transferring surpluses from consumers to producers.

On the voluntary provision of public goods under risk

This paper studies how risk impacts the voluntary provision of public goods. In a laboratory experiment, we create variants of a public good game by separating the return a subject’s contribution generates for herself vs. the return her contribution generates to others. We find a detrimental effect of risk on public good provision when returns in both dimensions are positively correlated or independent. A negative correlation leads to more stable investments. Disentangling the impact of risk in each dimension, we find that investments particularly respond to risk in the return to others. Investigating the impact of these different types of risks can inform theories on the nature of social preferences.

All it Takes is One: The Effect of Weakest-Link and Summation Aggregation on Public Good Provision Under Threshold Uncertainty

We report experimental evidence on the voluntary provision of public goods under threshold uncertainty. By explicitly comparing two prominent technologies, summation and weakest link, we show that uncertainty is particularly detrimental to threshold attainment under weakest link, where low contributions by one subject cannot be compensated by others. In contrast, threshold uncertainty does not affect contributions under summation. We demonstrate non-binding pledges as one mechanism to improve chances of threshold attainment under both technologies, yet in particular under weakest link.

An experimental study on voluntary vs. compulsory provision of public goods under the vote-with-feet mechanism

This paper conducts laboratory experiments to investigate how the individuals with heterogeneous income levels endogenously select the institution in public good provision in a Tiebout-like environment. According to the experimental results, I find that heterogeneous individuals have different choices of contribution institutions. High-income individuals tend to participate in the voluntary contribution institution, but low-income individuals tend to choose the compulsory one. I also find that most high-income individuals in the voluntary contribution institution try to free ride on others. Therefore, although the vote-with-feet mechanism helps to sort heterogeneous individuals in different contribution institutions, it may not enhance the cooperation among the individuals in the voluntary contribution community.

Moral Foundations and Voluntary Public Good Provision: The Case of Climate Change

Economic theory has invoked moral motivation as an explanation for the voluntary provision of public goods but is vague with regard to the specific moral concerns involved. Focusing on climate change as a case study, this paper relates morally-motivated public good provision to the six moral foundations (MFs) identified by moral psychologists: Care, Fairness and Liberty (individual-focused), and Loyalty, Authority and Sanctity (group-focused). Using data from the European Social Surveys it is found that using the MFs in addition to standard explanatory variables improves the explanation of climate-friendly behaviors and endorsement of climate-friendly regulations. While the Fairness and Care foundations are strong and robust predictors of the dependent variables, the Loyalty foundation contributes positively only when neglecting the nature of climate change mitigation as a global public good. More generally, in contrast to the individual-focused MFs (that apply to all individuals), the group-focused MFs are of little direct relevance to climate change mitigation – consistent with the benefit from mitigation extending beyond the in-group (family, neighborhood, region, or nation) to which these MFs refer. Group-focused MFs are only of indirect relevance as their endorsement fosters general environmental concern.

The strategic dimension of financing global public goods

One challenge in addressing transboundary problems such as climate change is the incentive to free-ride. Transfers from multilateral compensation funds are often used to counteract such incentives, albeit with varying success. We examine how such funds can change the incentive to free-ride in a global public-goods game. In our game, self-interested countries choose their own preferred course, deciding their voluntary public good provision, whether to join a fund that offers compensation for providing the public good and the volume of compensatory payments. We show that (i) total public-good provision is higher when those contributing are given more compensation; and (ii) non-participation in the fund can be punished if the remaining members decrease their public-good provision sufficiently. We then examine three specific fund designs. In the first, the compensation paid to each country is equal to the percentage of above-average total costs for public-goods provision. This design is best able to deter free-riding and can establish the social optimum as the equilibrium. In the second, the compensation paid to each country is a function of the marginal cost of their public-good provision. Here there are significant incentives to free-ride. In the third case, the monetary resources provided by the fund are fixed, a design frequently encountered in international funds. This design is the one least able to deter free-riding.