Welfare in the Volunteer’s Dilemma

Marco Battaglini and Thomas R Palfrey

No 19544, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the volunteer’s dilemma in environments with heterogeneous preferences and private information. We characterize the efficiency properties of equilibrium, which is a departure from all the previous literature that focuses only on the probability of group success. While the probability of success may be non-monotonic in the size of the group, we show that per-capita welfare is always increasing for all types, strictly for sufficiently high types. As group size increases, the expected utility of every type converges to the expected utility of the type with the lowest possible cost, which is the same expected utility when there is no free rider problem, i.e., when there is only a single player in the game and that player has the lowest possible cost.

JEL-codes: D71 D72 (search for similar items in EconPapers)
Date: 2024-09
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