A mechanism of proportional contributions for public good games

Arbeitspapier

Public good games in coalitional form, such as the ones depicting international environmental agreements for the reduction of a global pollutant, generally foresee scarce levels of cooperation. The incentive to free ride, that increases for higher levels of cooperation, prevents the formation of stable coalitions. The introduction of other-regarding preferences, in the form of Fehr and Schmidt utility functions, enlarges cooperation, but still at suboptimal levels. The present paper considers a further possibility, namely the introduction of a mechanism through which the contributions of players to the public good are proportional to the average contribution of the other players abiding to the mechanism: proportional contributions. The mechanism is therefore rooted into reciprocity. By applying it to a standard abatement game parameterized on the RICE model, we show that the mechanism is in fact able to increase cooperation both under standard and under F&S preferences. Stability of the grand coalition is never reached, but potential internally stable grand coalitions are achieved under F&S preferences. The attainment of higher cooperation comes at the expense of the level of global abatement that is lower when proportional contributions are in place.

Object Details

• ISBN: 978-3-96973-156-7
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Ruhr Economic Papers ; No. 990

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Public Goods ; Climate; Natural Disasters and Their Management; Global Warming
• Subject: Coalitional game ; cooperation ; F&S preferences ; public good ; reciprocity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rafat Beigpoor Shahrivar ; Duesterhoeft, Ilka ; Rogna, Marco ; Vogt, Carla
• Event: Veröffentlichung
• (who): RWI - Leibniz-Institut für Wirtschaftsforschung
• (where): Essen
• (when): 2023

Further information

• DOI: doi:10.4419/96973156
• Handle: http://hdl.handle.net/10419/268491
• Last update: 10.03.2025, 11:41 AM CET