Distributed public goods provision

Abstract

This article proposes a norm for funding public goods that aims to achieve both efficiency and robustness. The norm suggests that individuals should contribute to a public good an amount 100 times greater than the amount they would personally benefit if that good received 1% more funding. The author argues that this norm, if universally adopted, would lead to an optimal level of funding for public goods. Furthermore, even if new individuals, who do not follow the norm, join the community, they cannot make the original community worse off. The article then discusses various assumptions underlying the model, including the linearity of utility in money and the convexity of utility functions. It also considers the potential for a decentralized implementation of the norm, where individuals would adjust their contributions iteratively until an equilibrium is reached. The author acknowledges the potential complexities that arise when relaxing these assumptions, suggesting that non-convexity might lead to a vulnerability to manipulation and the need for more complex coordination mechanisms. – AI-generated abstract.