Positional and conformist effects in public good provision. Strategic interaction and inertia

Consumption satisfaction depends on other factors apart from the inherent characteristic ofcommodities. Leibenstein (1950) studies how the consumer's demand reacts to other factorsdifferent from the inherent characteristic of a specific commodity. In particular, he highlights thedesire of some consumers to be "in style", and the attempt by other for exclusiveness. The desireof some people to conform with the others, to be fashionable or stylish provokes a "bandwagoneffect": the demand for a commodity increases due to the fact that others are consuming this samecommodity. Conversely, the desire of some other people to be exclusive, or different from the"common hence" provokes the "snob" effect: the demand for a commodity decreases due to thefact that others are consuming it. This paper analyzes positional concerns and conformism in amodel of private contributions to public good. A positional consumer gets joy when his/her relativecontribution to the public good is higher than the average contribution by others. A conformistconsumers feels better if his behavior fits the average behavior in society, i.e., near the averagecontribution by others. The well-being of a conformist consumer decreases both when hiscontribution is above or below the average contribution by others. We analyze how positionalpreferences and conformism for voluntary contributions to a public good favor players'contributions and under which conditions can lead to social welfare improvements. A two-playerpublic good game between a positional and a conformist is analyzed, first in a one-shot game andlater in a simple dynamic game with inertia, placing particular attention to the transition path.Homogeneous and non-homogeneous individuals are considered regarding the players' valuationof the public good.