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A Flexible Design for Funding Public Goods

Vitalik Buterin (), Zoë Hitzig () and E. Glen Weyl ()
Additional contact information
Vitalik Buterin: Ethereum Foundation, 3600 Zug, Switzerland
Zoë Hitzig: Harvard University, Cambridge, Massachusetts 02138
E. Glen Weyl: Microsoft Research, New York, New York 10111

Management Science, 2019, vol. 65, issue 11, 5171-5187

Abstract: We propose a design for philanthropic or publicly funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from quadratic voting to a funding mechanism for endogenous community formation. Citizens make contributions to public goods of value to them. The amount received by the public good is (proportional to) the square of the sum of the square roots of contributions received. Under the “standard model,” this mechanism yields first best public goods provision. Variations can limit the cost, help protect against collusion, and aid coordination. We discuss applications to campaign finance and highlight directions for future analysis and experimentation.

Keywords: public goods; free-rider problem; mechanism design (search for similar items in EconPapers)
Date: 2019
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