Collective Choice in Dynamic Public Good Provision: Real versus Formal Authority
48 Pages Posted: 6 Nov 2015 Last revised: 29 Mar 2016
Date Written: November 15, 2015
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.
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