The problem of trust and modern Russian pension system

The paper attempts to identify the relationship between trust viewed through private good, club good, private external effects and public good, and pension systems, presented in the form of vertical and horizontal social contracts. Guided by the typology of benefits in the analysis of trust, the author argues: trust in a horizontal pension contract develops in a network of transactions regarding the production of a pension good and is a combination of its various types. In a vertical contract, the possibilities of individuals' retirement planning and the position of private structures in the pension market are limited, that reduces the role of trust as a private and club good and strengthens the importance of trust in the form of a public good. The author shows that in a horizontal pension contract, trust is a basic prerequisite for all pension interactions. The effectiveness of a horizontal pension contract depends on the level of trust: low trust increases transaction costs and makes pension planning unviable. The author concludes that in conditions of low confidence, satisfaction of pension needs is easier to organize through a vertical type contract in which pension needs are satisfied centrally. At the same time, low trust of Russians to pension institutions is the result of a vertical pension contract.

Club Formation and Response To Natural Disaster: An Example From South Carolina

In 2016, Hurricane Matthew caused approximately 10 billion dollars of damage in the United States and nearly 350 million dollars in South Carolina. The historic rainfall damaged or completely destroyed roads, bridges, buildings, crops, and dams. This paper documents how one small lakefront community in eastern South Carolina formed a de facto Buchanan Club to fund the reconstruction of a dam destroyed by Matthew and restore a small lake, an exemplary club good. This private response was needed because both the Federal and State governments declined public assistance. In the end and roughly approximately two years after Matthew, the dam was repaired and the lake refilled with the rainfall of Hurricane Florence.

The lighthouse after Coase: Alternative ways to provide goods and func-tions of state

This article attempts to answer the question of what determines the choice of the method to provide one or another public good. Why is one good given as a private one, another one as a club good, the third one as a purely public good, and the fourth one as a mix of different forms. In fact, this question includes the question of what the state should (and should not) do. The main part of the article presents a review of the discussion concerning the good, which played a special role in economic theory - the lighthouses. Although the classics of political economy of XIX - early XX centuries considered them as a striking example of pure public goods, the famous article by R. Coase [Coase, 1974] concludes that the services of lighthouses in England and Wales were not funded from general taxes, that is, they were not provided as public goods until the second third of XIX century. Further development of this discussion, which is still incomplete and relevant, leads to the understanding that lighthouse services are provided in different countries and/ or at different times as goods of various types. The same applies to almost any other goods. The concrete way of providing this good depends not only on the country and time, but also on how to estimate the specific offenses it provides. We conclude that there exist no private, public, etc. benefits by themselves, and a socially effective way of delivering benefits depends on the technologies and institutions available in the society.

Is social capital underproduced?

Is social capital likely to be underproduced without state action? Where previous analysts have typically argued that social capital is a public good and, therefore, needs government action to be produced at an optimal level, we argue that social capital is not a public good because though often non-rivalrous, it is almost always excludable. As such, social capital is more appropriately conceived of as a club good. Further, we argue that governments are not likely to be in a position to improve a society’s social capital due to epistemic limits and the complexity of social capital. Finally, we argue that rather than a state solution, solutions to social capital-related problems are best solved through a bottom-up process. As we demonstrate throughout, this has implications for how we understand community resilience in the wake of disasters. The key role that social capital plays in facilitating community rebound after disasters has been widely acknowledged. If social capital is a public good, then policymakers could be justified in focusing on cultivating social capital as a strategy for promoting community resilience. If social capital is a club good and there are limits to top-down strategies for creating social capital, however, then social capital creation is not an available policy lever.

Follow the majority? How voters coordinate electoral support to secure club goods

Voters often favor candidates who benefit them individually but may coordinate their support with their social group on other candidates in exchange for policies targeting their group. In a laboratory experiment, I induce group identities to investigate the behavior of voters facing such trade-offs. I find that groups with low within heterogeneity often secure the club good from a candidate who is also individually beneficial to a majority of the group. In more heterogeneous groups, coordination on that candidate often fails and while the group still receives club goods, it is from a candidate whose policies are otherwise individually costly to most of the group. The results highlight the role strategic considerations play in the formation of group-based electoral coalitions.

Politics, Public Goods, and Corporate Nudging in the HTTP/2 Standardization Process

The goal is to map out some policy problems attached to using a club good approach instead of a public good approach to manage our internet protocols, specifically the HTTP (Hypertext Transfer Protocol). Behavioral and information economics theory are used to evaluate the standardization process of our current generation HTTP/2 (2.0). The HTTP update under scrutiny is a recently released HTTP/2 version based on Google’s SPDY, which introduces several company-specific and best practice applications, side by side. A content analysis of email discussions extracted from a publicly accessible IETF (Internet Engineering Task Force) email server shows how the club good approach of the working group leads to an underperformance in the outcomes of the standardization process. An important conclusion is that in some areas of the IETF, standardization activities may need to include public consultations, crowdsourced volunteers, or an official call for public participation to increase public oversight and more democratically manage our intangible public goods.

Global Club Goods and the Fragmented Global Financial Safety Net

It is generally regarded that a robust global financial safety net is a global public good. Yet public goods models that explain the existence of the global financial safety net cannot also explain why it is highly fragmented and provisioned so inequitably. This study shows that the global financial safety net's existence, fragmentation, and inequitable coverage can be explained by modeling the global financial safety net as a global club good. The primary finding of the model is that when a state has a monopoly on the provision of a non-rival and excludable good (i.e., a club good), separate multilateral and bilateral club governance structures emerge, each with a unique structure and cost. Brief case studies of the global financial safety net provisioned by the International Monetary Fund, the Federal Reserve, and the Bank for International Settlements support the model.

Religious prohibition and sacrifice: evidence from the Amish restriction on high school education

The Amish collective objection to high school education and refusal to comply with compulsory schooling laws can be interpreted with a religious-club-good framework. According to the religious-club interpretation, the Amish use the restriction on secular education as a religious prohibition and sacrifice to improve the welfare of sect members. I exploit the 1972 U.S. Supreme Court's decision in Wisconsin vs. Yoder, which exempts Amish children from compulsory high school education, as a policy shock to test several key predictions of the religious-club explanations. The evidence suggests that the successful restriction on high school education helped the Amish sect exclude individuals with low religious participation, lower members' shadow cost of time, and grow the sect through higher fertility.

Should the Talk be Cheap in Contribution Games?

This paper studies the equilibria of contribution games with commitment and with cheap talk under incomplete information. When agents contribute to a club good, we find that with commitment, high types contribute early to induce low types to contribute in later rounds. With cheap talk, low types signal to contribute early but may drop out later if they find the total contributions are low. When there are sufficiently many rounds, we construct a cheap talk equilibrium that implements the ex-post efficient and ex-post individually rational allocation. In contrast, every equilibrium of the commitment game is inefficient. When the good is a public good, the cheap-talk game admits no informative equilibria. In this case, the equilibria of the commitment game may be more efficient.

If Science Is a Public Good, Why Do Scientists Own It?

I argue that if science is to be a public good, it must be made one. Neither science nor any other form of knowledge is naturally a public good. And given the history of science policy in the twentieth century, it would be reasonable to conclude that science is in fact what economists call a ‘club good’. I discuss this matter in detail in two contexts: (1) current UK efforts to create a version of the US DARPA that would focus on projects of larger, long-term societal interests – i.e. beyond the interests of the academic specialities represented in, say, the US NSF; (2) what I call the ‘organized hypocrisy’ involved in presenting science as a public good through the so-called ‘peer review’ process.