Positional and conformist effects in public good provision. Strategic interaction and inertia

Consumption satisfaction depends on other factors apart from the inherent characteristic of commodities. Leibenstein (1950) studies how the consumer's demand reacts to other factors different from the inherent characteristic of a specific commodity. In particular, he highlights the desire of some consumers to be "in style", and the attempt by other for exclusiveness. The desire of some people to conform with the others, to be fashionable or stylish provokes a "bandwagon effect": the demand for a commodity increases due to the fact that others are consuming this same commodity. Conversely, the desire of some other people to be exclusive, or different from the "common hence" provokes the "snob" effect: the demand for a commodity decreases due to the fact that others are consuming it. This paper analyzes positional concerns and conformism in a model of private contributions to public good. A positional consumer gets joy when his/her relative contribution to the public good is higher than the average contribution by others. A conformist consumers feels better if his behavior fits the average behavior in society, i.e., near the average contribution by others. The well-being of a conformist consumer decreases both when his contribution is above or below the average contribution by others. We analyze how positional preferences and conformism for voluntary contributions to a public good favor players' contributions and under which conditions can lead to social welfare improvements. A two-player public good game between a positional and a conformist is analyzed, first in a one-shot game and later in a simple dynamic game with inertia, placing particular attention to the transition path. Homogeneous and non-homogeneous individuals are considered regarding the players' valuation of the public good.