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The Difficulty of Easy Projects

Author

Listed:
  • Wioletta Dziuda
  • A. Arda Gitmez
  • Mehdi Shadmehr

Abstract

We consider binary private contributions to public good projects that succeed when the number of contributors exceeds a threshold. We show that for standard distributions of contribution costs, valuable threshold public good projects are more likely to succeed when they require more contributors. Raising the success threshold reduces free-riding incentives, and this strategic effect dominates the direct effect. Common intuition that easier projects are more likely to succeed only holds for cost distributions with right tails fatter than Cauchy. Our results suggest government grants can reduce the likelihood that valuable threshold public good projects succeed.

Suggested Citation

  • Wioletta Dziuda & A. Arda Gitmez & Mehdi Shadmehr, 2021. "The Difficulty of Easy Projects," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 285-302, September.
    • Handle: RePEc:aea:aerins:v:3:y:2021:i:3:p:285-302
    DOI: 10.1257/aeri.20200311
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    Citations

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    Cited by:

    1. Meng, Xia & Ding, Tao & Wang, Haisen, 2023. "Incentives for local government expenditures on people’s livelihood: the role of high-speed rail," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    2. Boris Ginzburg, 2023. "Slacktivism," Journal of Theoretical Politics, , vol. 35(2), pages 126-143, April.
    3. Hans Gersbach & Akaki Mamageishvili & Fikri Pitsuwan, 2023. "Crowdsearch," Papers 2311.08532, arXiv.org.

    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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