Working and Shirking: Equilibrium in Public-Goods Games with Overlapping Generations of Players
AbstractIn overlapping-generations models of public-goods provision, in which the contribution decision is binary and lifetimes are finite, the set of symmetric subgame-perfect equilibria can be categorized into three types: seniority equilibria, in which players contribute (effort) until a predetermined age and then shirk thereafter; dependency equilibria, in which players initially shirk, then contribute for a set number of periods, then shirk for the remainder of their lives; and sabbatical equilibria, in which players alternately contribute and shirk for periods of varying length before entering a final stage of shirking. In a world without discounting we establish conditions for equilibrium and demonstrate that for any dependency equilibrium there is a seniority equilibrium that Pareto dominates it ex ante. We proceed to characterize generational preferences over alternative seniority equilibria. We explore the aggregation of these preferences by embedding the public-goods provision game in a voting framework and solving for the majority-rule equilibria. In this way we can think of political processes as providing one natural framework for equilibrium selection in the original public-goods provision game. Copyright 2001 by Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Journal of Law, Economics and Organization.
Volume (Year): 17 (2001)
Issue (Month): 2 (October)
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- Sita Nataraj Slavov, 2006. "Public versus Private Provision of Public Goods," Occidental Economics Working Papers 2, Occidental College, Department of Economics, revised Mar 2006.
- Slavov Sita Nataraj, 2006.
"Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?,"
The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 6(1), pages 1-37, October.
- Sita Nataraj Slavov, 2001. "Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?," Occidental Economics Working Papers 1, Occidental College, Department of Economics, revised Jan 2006.
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