38 Pages Posted: 12 Aug 2016 Last revised: 30 Sep 2016
Date Written: August 8, 2016
Would you volunteer to pay a carbon tax if 99% of other Americans also volunteered to pay such a tax? Instead of traditional referenda, it is possible to structure plebiscites which would only bind a subset of the population (for example, to be subject to a carbon tax) if that subset’s individually chosen conditions for participation are met. While provision-point mechanisms with exogenously set provision points have garnered billions of dollars in private contributions, a broader class of “social contracting” mechanisms exist that allow individuals to bid on their preferred provision points. This article shows how both partial and probabilistic bidding schemes might foster voluntary subpopulation participation in a range of public good applications, and reports results from a series of randomized surveys of Internet respondents assessing the potential support for such subgroup “social contracting.” The respondent bids would, for example, support an equilibrium in which approximately 25% of the public would voluntarily commit to pay an additional 10% tax on electricity. Provision-point bidding and probability-bidding mechanisms are shown to increase willingness to participate both in voluntary taxation and in civil disobedience experiments. A probability-bidding mechanism increases the expected number of civil disobedience volunteers more than 9-fold relative to a mechanism where the probability of participation is exogenously given. In a separate sexual assault reporting experiment, subgroup social contracting is shown to shift 10% of subjects from informal reporting to matching escrows without cannibalizing the proportion of subjects who report formally – thus enhancing the expected number of sexual assault complaints that will ultimately be investigated.
Suggested Citation: Suggested Citation
Ayres, Ian, Voluntary Taxation and Beyond - The Promise of Social-Contracting Voting Mechanisms (August 8, 2016). Yale Law & Economics Research Paper No. 562. Available at SSRN: https://ssrn.com/abstract=2820299 or http://dx.doi.org/10.2139/ssrn.2820299