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Working and Shirking: Equilibrium in Public-Goods Games with Overlapping Generations of Players

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  • Dickson, Eric S
  • Shepsle, Kenneth A

Abstract

In 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.

Suggested Citation

  • Dickson, Eric S & Shepsle, Kenneth A, 2001. "Working and Shirking: Equilibrium in Public-Goods Games with Overlapping Generations of Players," Journal of Law, Economics, and Organization, Oxford University Press, vol. 17(2), pages 285-318, October.
  • Handle: RePEc:oup:jleorg:v:17:y:2001:i:2:p:285-318
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    Cited by:

    1. Sita Nataraj Slavov, 2014. "Public Versus Private Provision of Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 222-258, April.
    2. 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.
    3. Christoph Engel & Heike Hennig-Schmidt & Bernd Irlenbusch & Sebastian Kube, 2009. "On Probation. An Experimental Analysis," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2009_38, Max Planck Institute for Research on Collective Goods.
    4. Ernesto Dal Bó & Martín Rossi, 2008. "Term Length and Political Performance," NBER Working Papers 14511, National Bureau of Economic Research, Inc.
    5. Ando, Munetomo & Kobayashi, Hajime, 2008. "Intergenerational conflicts of interest and seniority systems in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 757-767, March.
    6. Wildman, John & Hollingsworth, Bruce, 2009. "Blood donation and the nature of altruism," Journal of Health Economics, Elsevier, vol. 28(2), pages 492-503, March.

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