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Social Norms and Private Provision of Public Goods
Author(s) -
Rege Mari
Publication year - 2004
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2004.00157.x
Subject(s) - public good , nobody , crowding out , economics , consumption (sociology) , subsidy , state (computer science) , popularity , public economics , altruism (biology) , crowding , positive economics , microeconomics , law and economics , political science , social psychology , sociology , market economy , law , psychology , monetary economics , social science , algorithm , neuroscience , computer science , operating system
The formation of social norms for voluntary contributions to a public good is analyzed in a game in which people have preferences for private consumption, a public good, and social approval. Each person chooses to be one of the two types: a contributor or a non‐contributor. Thereafter, each person meets people who can observe his type. A non‐contributor feels disapproval, whereas a contributor feels approval if he believes that a contributor observes his type. The game has two asymptotically stable states: one in which everybody is a contributor, and one in which nobody is a contributor. Governmental subsidization of the public good can move the society to the former state, whereas a governmental contribution to the public good can move the society to the latter. Indeed, this crowding in or crowding out prevails even after policy reversal.