Do positional preferences cause welfare gains?
Sandrine Costa (),
Gilles Grolleau () and
Lisette Ibanez ()
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Sandrine Costa: MOISA, Univ Montpellier, CIRAD, CIHEAM-IAMM, INRA, Montpellier SupAgro, Montpellier, France
Gilles Grolleau: CEE-M, Univ Montpellier, CNRS, INRA, Supagro, Univ. Bourgogne, Burgundy School of Business-CEREN
Lisette Ibanez: CEE-M, Univ Montpellier, CNRS , INRA, Montpellier SupAgro, Montpellier, France
Economics Bulletin, 2019, vol. 39, issue 2, 1228-1241
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.
Keywords: Position; Public goods; Status (search for similar items in EconPapers)
JEL-codes: H4 D6 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-18-00362
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