Do positional preferences cause welfare gains?

Douadia Bougherara, Sandrine Costa (), Gilles Grolleau () and Lisette Ibanez
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Sandrine Costa: MOISA, Univ Montpellier, CIRAD, CIHEAM-IAMM, INRA, Montpellier SupAgro, Montpellier, France

Economics Bulletin, 2019, vol. 39, issue 2, 1228-1241

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.

Keywords: Position; Public goods; Status (search for similar items in EconPapers)
JEL-codes: D6 H4 (search for similar items in EconPapers)
Date: 2019-05-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Do positional preferences cause welfare gains? (2019)
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