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Pareto-optimality in linear public goods games

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  • Hokamp, Sascha
  • Pickhardt, Michael

Abstract

We derive a generalized method for calculating the total number of Paretooptimal allocations (NOPA) in typical linear public goods games. Among other things, the method allows researchers to develop new experimental designs for testing the relevance of Pareto-optimality in experimental settings, for investigating alternative causes of the decline of voluntary contributions, or for analyzing the contribution behavior of the rich and poor in heterogeneous income settings. Further findings include that the NOPA is related to the marginal per capita return (MPCR) of a contribution to the public good and that the maximum number of free-riders tolerated by the Paretooptimality concept is independent from the group size and income distribution. Finally, we apply our findings to a number of published linear public goods games, suggest an agenda for future research and provide a MATLAB code.

Suggested Citation

  • Hokamp, Sascha & Pickhardt, Michael, 2011. "Pareto-optimality in linear public goods games," CAWM Discussion Papers 45, University of Münster, Münster Center for Economic Policy (MEP).
    • Handle: RePEc:zbw:cawmdp:45
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Hokamp, Sascha, 2014. "Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 187-199.

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    More about this item

    Keywords

    linear public goods games; Pareto-optimality; public goods experiments; behavioral economics; free-rider; heterogeneous incomes; heterogeneous MPCRs;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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