Information Disclosure and Voluntary Contributions to Public Goods

Abstract:     
This paper analyzes the effect of information generation and disclosure upon free riding and on the likelihood that cooperative efforts collapse in a public goods game. The model shows that the prospect of greater disclosure can make all individuals worse off ex ante by reducing expected contributions to the public good. Conditions under which disclosure becomes either more or less desirable are derived as a function of the number of individual contributors. Regulation or competitive problems that increase direct costs of disclosure may on average increase the provision of public goods and improve welfare. The desirability of disclosure in the contexts of collective political action, debt renegotiation, and production in teams are discussed.

JEL Classification: D82, D62, H41

Accepted Paper Series