Collective Choice in Dynamic Public Good Provision
American Economic Journal: Microeconomics, Forthcoming
61 Pages Posted: 28 Sep 2015 Last revised: 26 May 2018
Date Written: May 1, 2018
Two heterogeneous agents contribute over time to a joint project, and collectively decide its scope. A larger scope requires greater cumulative effort and delivers higher benefits upon completion. We show that the efficient agent prefers a smaller scope, and preferences are time-inconsistent: as the project progresses, the efficient (inefficient) agent's preferred scope shrinks (expands). We characterize the equilibrium outcomes under dictatorship and unanimity, with and without commitment. We find that an agent's degree of efficiency is a key determinant of control over project scopes. From a welfare perspective, it may be desirable to allocate decision rights to the inefficient agent.
Keywords: free-riding, collective choice, public goods, contribution games, authority
JEL Classification: C73, H41, D70, D78
Suggested Citation: Suggested Citation