Ideals Should Not Be Too Ideal: Identity and Public Good Contribution

Abstract

This paper incorporates identity into a model of voluntary public good contribution. An ideal of contributing to public goods divides players to different social categories: Players who identify with the ideal become insiders, obtaining identity utility but incurring disutility if their contributions depart from the ideal, while players who do not identify with the ideal remain as outsiders. We show that identity could increase public good contribution; the ideal that best resolves the free-riding problem in the public good game equals either the contribution level of the most altruistic player in the absence of the identity, or a level that makes the least altruistic player indifferent between becoming an insider and not, depending on the size of the group. These results have implications for social policymaking.

Keywords: Ideals, Identity, Public Goods, Social Categories

JEL Classification: D03, H41