We consider a general model of the non-cooperative provision of a public good. Under very weak assumptions there will always exist a unique Nash equilibrium in our model. A small redistribution of wealth among the contributing consumers will not change the equilibrium amount of the public good

This paper provides evidence that free riders are heavily punished even if punishment is costly and does not provide any material benefits for the punisher. The more free riders negatively deviate from the group standard the more they are punished. As a consequence, the existence of an opportunity for costly punishment causes a large increase in cooperation levels because potential free riders face a credible threat. We show, in particular, that in the presence of a costly punishment opportunity almost complete cooperation can be achieved and maintained although, under the standard assumptions of rationality and selfishness, there should be no cooperation at all. We also show that free riding causes strong negative emotions among cooperators. The intensity of these emotions is the stronger the more the free riders deviate from the group standard. Our results provide, therefore, support for the hypothesis that emotions are guarantors of credible threats.

We present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. We test the implications of the model with three related data sets: U. S. cities, U. S. metropolitan areas, and U. S. urban counties. Results show

Abstract not found

This paper examines the role of simplified heuristics in the formation of preferences for public goods. Political scientists have suggested that voters use simplified heuristics based on the positions of familiar parties to infer how a proposed policy will affect them and to cast a vote in line

The evolution and maintenance of cooperation in human and animal societies challenge various disciplines ranging from evolutionary biology to anthropology, social sciences, and economics. In social interactions, cooperators increase the welfare of the group at some cost to themselves whereas defectors attempt to free ride and neither provide benefits nor incur costs. The problem of cooperation becomes even more pronounced when increasing the number of interacting individuals. Punishment and voluntary participation have been identified as possible factors to support cooperation and prevent cheating. Typically, punishment behavior is unable to gain a foothold in a population, while volunteering alone can efficiently prevent deadlocks in states of mutual defection but is unable to stabilize cooperation. The combined effects of the two mechanisms have surprisingly different consequences in finite and infinite populations. Here we provide a detailed comparison of the two scenarios and demonstrate that driven by the inherent stochasticity of finite populations, the possibility to abstain from social interactions plays a pivotal role, which paves the way for the establishment of cooperation and punishment.

Papers for discussion

Strategy-proof allocation mechanisms for economies

This paper considers incentives to provide goods that are non-excludable along social or geographic links. We find, first, that networks can lead to specialization in public good provision. In every social network there is an equilibrium where some individuals contribute and others free

We discuss a fundamental trade-off in the political process that can lead to inefficient provision of public goods: politicians may not offer to provide socially desirable public goods because the benefits of the public good cannot be targeted to voters as easily as pork barrel spending. We study