Soliciting Accurate Evaluations of Public Goods

1981 ◽  
Vol 9 (2) ◽  
pp. 221-234 ◽  
Author(s):  
A. H. Barnett
Keyword(s):  
Risk Aversion ◽  
Public Goods ◽  
Free Rider ◽  
Public Funds ◽  
Policy Makers ◽  
Free Rider Problem ◽  
Bidding Mechanism ◽  
The Many

Among the many problems faced by policy makers in attempts to use public funds efficiently, none is more troublesome than that of inducing users of public goods to reveal their demand prices. The difficulty in attempts to solicit demand prices falls under the general rubric of the free-rider problem, and is manifest in the propensity of users to behave strategically when asked to reveal evaluations. Several preference revelation devices have been proposed to surmount this problem, but all of these schemes are seriously flawed. This article presents a device which overcomes some of the flaws contained in previous work. The preference revealing mechanism proposed here is a bidding mechanism which takes advantage of the commonly found trait of risk-aversion to discourage strategic revelations.

scholarly journals The Effect of Trusting and Trustworthy Environments on the Provision of Public Goods

2020 ◽  
Author(s):  
Sergio Lo Iacono ◽  
Burak Sonmez
Keyword(s):  
Public Goods ◽  
Learning Effect ◽  
Free Rider ◽  
Trust Game ◽  
Similar Distribution ◽  
Incentive Structure ◽  
Free Rider Problem ◽  
Free Ride ◽  
Relevant Effect ◽  
Distribution Of Resources

Abstract Trusting and trustworthy environments are argued to promote collective action, as people learn to rely on their fellow citizens and believe that only few individuals will free ride. To test the causal validity of this mechanism, we propose an experimental design that allows us to create different trusting and trustworthy conditions simply by (i) manipulating the incentive structure of an iterated binary trust game and (ii) allowing information to flow among participants. Findings indicate that, given a similar distribution of resources among subjects, trusting and trustworthy environments strongly foster the provision of public goods. This outcome is largely driven by a learning effect: subjects transfer what they assimilate during a sequence of dyadic exchanges to their decision to act for the collectivity. In particular, results showed that what we learn from the community has a relevant effect on our ability to overcome the free-rider problem: we are more likely to act for the collectivity when we learn from the community to be trustful or reliable in our one-to-one interactions. The same applies in the opposite direction: we are more prone to free ride when we learn from the environment to be distrustful or unreliable in our dyadic exchanges.

Political Centralization and Labour Coercion: Latin America and Russia in Comparative Perspective

Itinerario ◽  
1997 ◽  
Vol 21 (1) ◽  
pp. 137-156 ◽  
Author(s):  
Mario Pastore ◽  
Herman Freudenberger
Keyword(s):  
Latin America ◽  
Public Goods ◽  
Basic Principle ◽  
Free Riding ◽  
Free Rider ◽  
The Other ◽  
Comparative Perspective ◽  
Transactions Costs ◽  
Free Rider Problem ◽  
The Government

Government requires coercion, if only to arrest free riding. Physical coercion alone may not suffice for this purpose, however, and ideological means may be needed as well. This basic principle underlies all government. In market economies the coercive capabilities of government may be expected to be financed out of taxes ultimately levied on factor owners' money incomes, that is, on wages, profits, and rent. On the other hand, in economies where markets have not developed due to high transactions costs individuals' contributions to the provision of public goods will take the form of payments in kind and labour services. In this case, the free rider problem suggests labourers will attempt to shirk; the government, therefore, will have to compel labourers to work and, therefore, will appear to be coercing labour even though it may only be seeking to curtail shirking.

scholarly journals Modes of Collective Action in Village Economies: Evidence from Natural and Artefactual Field Experiments in a Developing Country

2013 ◽  
Vol 30 (1) ◽  
pp. 31-51 ◽  
Author(s):  
Yasuyuki Sawada ◽  
Ryuji Kasahara ◽  
Keitaro Aoyagi ◽  
Masahiro Shoji ◽  
Mika Ueyama
Keyword(s):  
Collective Action ◽  
Size Effect ◽  
Public Goods ◽  
Group Size ◽  
Field Experiments ◽  
Free Riding ◽  
Free Rider ◽  
Individual Contribution ◽  
Free Rider Problem ◽  
Group Size Effect

In a canonical model of collective action, individual contribution to collective action is negatively correlated with group size. Yet, empirical evidence on the group size effect has been mixed, partly due to heterogeneities in group activities. In this paper, we first construct a simple model of collective action with the free rider problem, altruism, public goods, and positive externalities of social networks. We then empirically test the theoretical implications of the group size effect on individual contribution to four different types of collective action, i.e., monetary or nonmonetary contribution to directly or indirectly productive activities. To achieve this, we collect and employ artefactual field experimental data such as public goods and dictator games conducted in southern Sri Lanka under a natural experimental situation where the majority of farmers were relocated to randomly selected communities based on the government lottery. This unique situation enables us to identify the causal effects of community size on collective action. We find that the levels of collective action can be explained by the social preferences of farmers. We also show evidence of free riding by self-interested households with no landholdings. The pattern of collective action, however, differs significantly by mode of activity—collective action that is directly rather than indirectly related to production is less likely to suffer from the free rider problem. Also, monetary contribution is less likely to cause free riding than nonmonetary labor contribution. Unlike labor contributions, monetary contributions involve collection of fees which can be easily tracked and verified, possibly leading to better enforcement of collective action.

Private provision of public goods via crowdfunding

2017 ◽  
Vol 14 (1) ◽  
pp. 23-44 ◽  
Author(s):  
MAREK HUDIK ◽  
ROBERT CHOVANCULIAK
Keyword(s):  
Public Goods ◽  
Case Studies ◽  
Free Rider ◽  
The Internet ◽  
Private Provision ◽  
Police Services ◽  
Free Rider Problem ◽  
Efficient Mechanisms ◽  
Assurance Problem

AbstractFor various reasons, governments sometimes fail to provide public goods. Private provision of such goods might then be used if it succeeds in overcoming three main problems: high organization costs, the assurance problem, and the free-rider problem. We argue that technologies that enable crowdfunding – the method of funding projects by raising small amounts of money from a large number of people via the internet – have enabled these problems to be overcome more readily. Such technology has lowered organization costs and enabled the employment of more efficient mechanisms to reduce the assurance and free-rider problems. To illustrate these effects, we present two case studies of private provision of public goods via crowdfunding: police services in Rockridge in Oakland, California, and the Ukraine Army.

Using Neural Measures of Economic Value to Solve the Public Goods Free-Rider Problem

Science ◽  
2009 ◽  
Vol 326 (5952) ◽  
pp. 596-599 ◽  
Author(s):  
I. Krajbich ◽  
C. Camerer ◽  
J. Ledyard ◽  
A. Rangel
Keyword(s):  
Public Goods ◽  
Economic Value ◽  
Free Rider ◽  
The Public ◽  
Free Rider Problem

scholarly journals Self-reliance crowds out group cooperation and increases wealth inequality

2020 ◽  
Vol 11 (1) ◽  
Author(s):  
Jörg Gross ◽  
Sonja Veistola ◽  
Carsten K. W. De Dreu ◽  
Eric Van Dijk
Keyword(s):  
Public Goods ◽  
Wealth Inequality ◽  
Free Rider ◽  
Public Goods Provision ◽  
Free Rider Problem ◽  
Self Reliance ◽  
Group Cooperation ◽  
The Commons ◽  
Group Members ◽  
Shared Problem

Abstract Humans establish public goods to provide for shared needs like safety or healthcare. Yet, public goods rely on cooperation which can break down because of free-riding incentives. Previous research extensively investigated how groups solve this free-rider problem but ignored another challenge to public goods provision. Namely, some individuals do not need public goods to solve the problems they share with others. We investigate how such self-reliance influences cooperation by confronting groups in a laboratory experiment with a safety problem that could be solved either cooperatively or individually. We show that self-reliance leads to a decline in cooperation. Moreover, asymmetries in self-reliance undermine social welfare and increase wealth inequality between group members. Less dependent group members often choose to solve the shared problem individually, while more dependent members frequently fail to solve the problem, leaving them increasingly poor. While self-reliance circumvents the free-rider problem, it complicates the governing of the commons.

scholarly journals Incumbent policy, benefits provision, and the triggering and spread of revolutionary uprisings

2017 ◽  
Vol 12 (1) ◽  
Author(s):  
Kjell Hausken ◽  
Mthuli Ncube
Keyword(s):  
Health Care ◽  
Public Goods ◽  
Arab Spring ◽  
Unit Cost ◽  
Free Rider ◽  
Free Rider Problem ◽  
Modeling Approaches ◽  
The Cost ◽  
The Arab Spring ◽  
Health Care Safety

This article analyzes revolutionary uprisings, such as the Arab spring of 2011. Revolutions occur with an inherent probability dependent on a country’s characteristics. A country’s incumbent leader can decrease this probability by providing benefits to a population, e.g., public goods such as necessities of life, health care, safety, and education. We equate the probability of revolution with Granovetter’s equilibrium proportion of a population that joins a revolution. Decreased  benefits provision increases the share of revolutionaries which, in turn, decreases the cost of revolt which helps resolve the free-rider problem implicit in revolting. The article quantifies how the incumbent chooses whether or not to provide benefits, and how many benefits to provide. We account for the unit cost of providing benefits and for the effects of the benefits provided, adjusted for whether the inherent revolution probability is low or high. Combining the modeling approaches, i.e., how revolutions spread and how the incumbent provides benefits, enriches our understanding of which factors affect revolutions and of how populations and their incumbent leaders interact. The model helps to understand the logic of revolutionary uprisings and how they can be curtailed.

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