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On Non-monetary Incentives for the Provision of Public Goods

Author

Listed:
  • Michela Chessa

    (Université Côte d'Azur, France
    GREDEG CNRS)

  • Patrick Loiseau

    (EURECOM
    Max Planck Institute for Software Systems (MPI-SWS))

Abstract

We propose a non-monetary incentive mechanism to encourage high levels of contribution in public good provision. Based on a generic public good game, we implement a variation that imposes a minimum individual contribution level and offers individuals the choice between respecting it if they decide to contribute, or contributing zero. Restricting the individuals' strategy space in that way can stimulate them toward higher eorts while leaving them the possibility of contributing zero ensures that such eorts remain voluntary. We investigate how to tune the minimum contribution level in order to maximize the total contribution and to reach a stable outcome where no individual has incentive to free-ride. Exploiting the potential nature of the game, we show that one can set the minimum contribution level such that there exists a unique potential maximizer equilibrium in which all the individuals contribute to the public good. Our work is of particular relevance to the growing eld of information economics. Specically, we provide an application of our model to data analytics projects using information with privacy implications, a domain where individuals (and regulatory provisions) consider as fundamental to be able to exercise control and where monetary compensation has so-far received little traction in practical scenarios.

Suggested Citation

  • Michela Chessa & Patrick Loiseau, 2017. "On Non-monetary Incentives for the Provision of Public Goods," GREDEG Working Papers 2017-24, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
  • Handle: RePEc:gre:wpaper:2017-24
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Public goods; Potential games; Non-monetary incentives; Minimum contribution level;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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