Do positional preferences cause welfare gains?

Douadia Bougherara, Sandrine Costa (), Gilles Grolleau () and Lisette Ibanez
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Sandrine Costa: UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier

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Abstract: We examine conditions for which positional preferences for voluntary contribution to a public good can be welfare enhancing in a one-shot public good game, where individuals may also enjoy a return from their contribution ranking. We show that positional preferences are welfare-increasing only under certain conditions. We find that when agents' positional preferences are homogeneous, they overinvest in the public good compared to equilibrium with no positional preferences, resulting in a zero-sum positional race with a higher public good provision. When agents have heterogeneous positional preferences, the overall impact on social welfare is positive when endowments are homogeneous.

Date: 2019
New Economics Papers: this item is included in nep-mic
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02137164v1
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Citations: View citations in EconPapers (2)

Published in Economics Bulletin, 2019, 39 (2), pp.1228-1241

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-02137164

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