Membership in Citizen Groups

Caltech Social Science Working Paper No. 1206

33 Pages Posted: 5 Feb 2005 Last revised: 28 Jul 2008

See all articles by Andrea Mattozzi

Andrea Mattozzi

European University Institute - Economics Department (ECO)

Stefano Barbieri

Tulane University - Department of Economics

Date Written: July 2008

Abstract

We analyze the coordination problem of agents deciding to join a group that uses membership revenues to provide a discrete public good and excludable benefits. The public good and the benefits are jointly produced, so that benefits are valued only if the group succeeds in providing the public good. With asymmetric information about the cost of provision, the static membership game admits a unique equilibrium and we characterize the optimal membership fee. We show that heterogeneity in valuations for the excludable benefits is always detrimental to the group. However, in a dynamic contest in which heterogeneity arises endogenously (returning members receive additional seniority benefits at the expense of junior members), we show that, in the ex-ante optimal contract, offering seniority benefits is beneficial for the group, despite the heterogeneity in valuations created.

Keywords: Public Goods, Associations, Dynamic Global Games

JEL Classification: C73, D71

Suggested Citation

Mattozzi, Andrea and Barbieri, Stefano, Membership in Citizen Groups (July 2008). Caltech Social Science Working Paper. Available at SSRN: https://ssrn.com/abstract=644585 or http://dx.doi.org/10.2139/ssrn.644585

Andrea Mattozzi (Contact Author)

European University Institute - Economics Department (ECO) ( email )

Villa San Paolo
Via della Piazzuola 43
50133 Florence
Italy

Stefano Barbieri

Tulane University - Department of Economics ( email )

New Orleans, LA 70118
United States

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