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Pareto meets Olson – A Note on Pareto-optimality and Group Size in Linear Public Goods Games

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  • Pickhardt Michael

Abstract

In this paper I examine the relationship between Pareto-optimality and group size in linear public goods games or experiments. In particular, I use the standard setting of homogeneous linear public goods experiments and apply a recently developed tool to identify all Pareto-optimal allocations in such settings. It turns out that under any conceivable circumstances, ceteris paribus, small groups have a higher Pareto-ratio (Pareto-optimal allocations over total allocations) than large groups. Hence, if Pareto-optimality of an allocation is a property that makes such allocations acceptable and maintainable, small groups will find is easier to provide Pareto-optimal amounts of a public good than large groups. This is a novel reasoning for Mancur Olson′s claim, in particular, with respect to what he has termed inclusive goods and inclusive groups.

Suggested Citation

  • Pickhardt Michael, 2012. "Pareto meets Olson – A Note on Pareto-optimality and Group Size in Linear Public Goods Games," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 63(1), pages 195-202, January.
    • Handle: RePEc:bpj:ordojb:v:63:y:2012:i:1:p:195-202:n:15
    DOI: 10.1515/ordo-2012-0115
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    1. Chamberlin, John, 1974. "Provision of Collective Goods As a Function of Group Size," American Political Science Review, Cambridge University Press, vol. 68(2), pages 707-716, June.
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    3. Rachel T. A. Croson, 2007. "Theories Of Commitment, Altruism And Reciprocity: Evidence From Linear Public Goods Games," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 199-216, April.
    4. Sascha Hokamp & Michael Pickhardt, "undated". "Pareto-optimality in Linear Public Goods Games," Working Papers 201171, Institute of Spatial and Housing Economics, Munster Universitary.
    5. Michael Pickhardt, 2005. "Teaching Public Goods Theory With a Classroom Game," The Journal of Economic Education, Taylor & Francis Journals, vol. 36(2), pages 145-159, April.
    6. Ananish Chaudhuri, 2011. "Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 47-83, March.
    7. Brandts, Jordi & Schram, Arthur, 2001. "Cooperation and noise in public goods experiments: applying the contribution function approach," Journal of Public Economics, Elsevier, vol. 79(2), pages 399-427, February.
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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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