Dynamic behaviors and contribution to public goods – DBCPG

In this project, we address the question of how taking into account dynamics may highlight our understanding of individual contributions to public goods. We focus on two special cases of public goods: knowledge production and fundraising. The knowledge production market is inefficient because of the public good nature of knowledge and the positive externalities it exerts (without regulation such as patents, discoveries benefit to everyone, and more knowledge in one sector implies more knowledge in other sectors). Therefore, the equilibrium of the market of knowledge production is typically inefficient, with too few knowledge produced. Fundraising is also an example of public good. When it comes to collect money for a charity purpose, typical individuals wish the highest amount would be collected but prefer others to contribute. In both cases, improving efficiency of the market is a crucial issue for the policy maker.

When involved in dynamic relationships, agents may adopt different strategies than in one shot situations. In particular, they may prefer to choose a myopically sub-optimal action (like contributing to the public good today), if it allows them to increase their future payoffs. This is the well-known example of the prisonners’ dilemma, in which players defect in the one-shot game, but may cooperate with each other if the game is repeated. In other words, dynamic relationships modify incentives. Understanding how individuals contribute to the public good in dynamic settings is then crucial for the policy maker, whose aim is to restore efficiency of the market equilibrium.The aim of this project is therefore to study dynamic behaviours of knowledge production and fundraising, and to find mechanisms that may foster efficiency in these markets.