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Social Norms and Private Provision of Public Goods

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  • Mari Rege
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    Abstract

    The formation of social norms for voluntary contributions to a public good is analyzed in a game in which people have preferences for private consumption, a public good, and social approval. Each person chooses to be one of the two types: a contributor or a non-contributor. Thereafter, each person meets people who can observe his type. A non-contributor feels disapproval, whereas a contributor feels approval if he believes that a contributor observes his type. The game has two asymptotically stable states: one in which everybody is a contributor, and one in which nobody is a contributor. Governmental subsidization of the public good can move the society to the former state, whereas a governmental contribution to the public good can move the society to the latter. Indeed, this crowding in or crowding out prevails even after policy reversal. Copyright 2004 Blackwell Publishing Inc..

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    Bibliographic Info

    Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

    Volume (Year): 6 (2004)
    Issue (Month): 1 (02)
    Pages: 65-77

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    Handle: RePEc:bla:jpbect:v:6:y:2004:i:1:p:65-77

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