Collective Choice in Dynamic Public Good Provision: Real versus Formal Authority

48 Pages Posted: 6 Nov 2015 Last revised: 29 Mar 2016

See all articles by T. Renee Bowen

T. Renee Bowen

University of California, San Diego; National Bureau of Economic Research; Center for Commerce and Diplomacy (CCD)

George Georgiadis

Northwestern University - Kellogg School of Management

Nicolas S. Lambert

Stanford Graduate School of Business - Knight Management Center

Multiple version iconThere are 4 versions of this paper

Date Written: November 15, 2015

Abstract

Two heterogeneous agents exert effort over time to complete a project and collectively decide its scope. A larger scope requires greater cumulative effort and delivers higher benefits upon completion. To study the scope under collective choice, we derive agents’ preferences over scope. The efficient agent prefers a smaller scope, and preferences are time-inconsistent: as the project progresses, the efficient agent’s preferred scope shrinks, whereas the inefficient agent’s preferred scope expands. In equilibrium without commitment, the efficient agent obtains his ideal project scope with either agent as dictator and under unanimity. In this sense, the efficient agent always has real authority.

Suggested Citation

Bowen, T. Renee and Georgiadis, George and Lambert, Nicolas S., Collective Choice in Dynamic Public Good Provision: Real versus Formal Authority (November 15, 2015). Stanford University Graduate School of Business Research Paper No. 15-64, Available at SSRN: https://ssrn.com/abstract=2686346 or http://dx.doi.org/10.2139/ssrn.2686346

T. Renee Bowen (Contact Author)

University of California, San Diego ( email )

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Center for Commerce and Diplomacy (CCD) ( email )

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George Georgiadis

Northwestern University - Kellogg School of Management ( email )

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Nicolas S. Lambert

Stanford Graduate School of Business - Knight Management Center ( email )

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