Optimal Altruism in Public Good Provision

38 Pages Posted: 21 Dec 2013 Last revised: 22 Jan 2014

See all articles by Robert W. Hahn

Robert W. Hahn

Technology Policy Institute; University of Oxford, Smith School

Robert Ritz

University of Oxford

Date Written: January 2014


We present a model of altruistically-minded-yet rational-players contributing to a public good. A key feature is the tension between altruism and "crowding-out" effects (players' efforts are strategic substitutes). We find that more altruistic behaviour can raise or reduce welfare, depending on the fine details of the environment. It is almost always optimal for a player to act more selfishly than her true preference. We discuss "carbon leakage" and the "social carbon of carbon" in global climate policy, and applications to other public-good problems. Our results highlight that it may be difficult to infer social preferences from observed behaviour.

Keywords: altruism, climate policy, crowding out, public goods, social cost of carbon

JEL Classification: policy, economics

Suggested Citation

Hahn, Robert W. and Ritz, Robert, Optimal Altruism in Public Good Provision (January 2014). Available at SSRN: https://ssrn.com/abstract=2370259 or http://dx.doi.org/10.2139/ssrn.2370259

Robert W. Hahn (Contact Author)

Technology Policy Institute ( email )

1401 Eye St. NW
Suite 505
Washington, DC 20005
United States

University of Oxford, Smith School ( email )

United Kingdom

Robert Ritz

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

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