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Altruism and charitable giving in a fully replicated economy

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  • Thomas Gaube

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    (Max Planck Institute for Research on Collective Goods, Bonn, Germany)

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    Abstract

    In this paper, an economy is analyzed where one group of agents, the altruists, cares about the well-being of another group of agents, the recipients. It is asked how changes in the size of these groups affect the altruists’ charitable giving in the Nash equilibrium. I show that a pure group size effect, i.e., a proportional expansion of both subgroups can lead to less free riding and to a lower degree of underprovision relative to the efficient level of charitable giving.

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    File URL: http://www.coll.mpg.de/pdf_dat/2005_08online.pdf
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    Bibliographic Info

    Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2005_8.

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    Length: 24 pages
    Date of creation: Apr 2005
    Date of revision:
    Handle: RePEc:mpg:wpaper:2005_08

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    Related research

    Keywords: altruism; public goods; group size; charitable giving;

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    References

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    1. Cornes, Richard & Hartley, Roger & Sandler, Todd, 1999. "Equilibrium Existence and Uniqueness in Public Good Models: An Elementary Proof Via Contraction," Staff General Research Papers 1630, Iowa State University, Department of Economics.
    2. Fries, Timothy L & Golding, Edward & Romano, Richard E, 1991. "Private Provision of Public Goods and the Failure of the Neutrality Property in Large Finite Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 147-57, February.
    3. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 1998. "A theoretical analysis of altruism and decision error in public goods games," Journal of Public Economics, Elsevier, vol. 70(2), pages 297-323, November.
    4. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, Econometric Society, vol. 51(6), pages 1753-65, November.
    5. Haan, M. & Kooreman, P., 2000. "Free riding and the provision of candy bars," Research Report 00F48, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    6. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
    7. Riber, D.C. & Wilhelm, M.O., 1996. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Papers, Pennsylvania State - Department of Economics 1-96-4, Pennsylvania State - Department of Economics.
    8. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 94(375), pages 580-98, September.
    9. Brunner, Eric J, 1998. " Free Riders or Easy Riders?: An Examination of the Voluntary Provision of Public Radio," Public Choice, Springer, Springer, vol. 97(4), pages 587-604, December.
    10. Martin McGuire, 1974. "Group size, group homo-geneity, and the aggregate provision of a pure public good under cournot behavior," Public Choice, Springer, Springer, vol. 18(1), pages 107-126, June.
    11. R. M. Isaac & J. M. Walker, 2010. "Group size effects in public goods provision: The voluntary contribution mechanism," Levine's Working Paper Archive 310, David K. Levine.
    12. Wolfgang Buchholz & Wolfgang Peters, 2001. "The overprovision anomaly of private public good supply," Journal of Economics, Springer, Springer, vol. 74(1), pages 63-78, February.
    13. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
    14. Goeree, Jacob K. & Holt, Charles A. & Laury, Susan K., 2002. "Private costs and public benefits: unraveling the effects of altruism and noisy behavior," Journal of Public Economics, Elsevier, vol. 83(2), pages 255-276, February.
    15. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 100(401), pages 464-77, June.
    16. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, Econometric Society, vol. 70(2), pages 737-753, March.
    17. Gaube, Thomas, 2001. "Group size and free riding when private and public goods are gross substitutes," Economics Letters, Elsevier, vol. 70(1), pages 127-132, January.
    18. Lipford, Jody W, 1995. " Group Size and the Free-Rider Hypothesis: An Examination of New Evidence from Churches," Public Choice, Springer, Springer, vol. 83(3-4), pages 291-303, June.
    19. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
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    Cited by:
    1. Hakenes, Hendrik & Schnabel, Isabel, 2006. "The Threat of Capital Drain: A Rationale for Public Banks?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 107, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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