Collective Choice in Dynamic Public Good Provision
Two heterogeneous agents contribute over time to a joint project, and collectively decide its scope. A larger scope requires greater cumulative effort and delivers higher benefits upon completion. We show that the efficient agent prefers a smaller scope, and preferences are time-inconsistent: as the project progresses, the efficient (inefficient) agent’s preferred scope shrinks (expands). We characterize the equilibrium outcomes under dictatorship and unanimity, with and without commitment. We find that an agent’s degree of efficiency is a key determinant of control over project scopes. From a welfare perspective, it may be desirable to allocate decision rights to the inefficient agent.
An earlier version of this paper circulated under the title “Collective Choice in Dynamic Public Good Provision: Real versus Formal Authority.” We thank Eduardo Azevedo, Dan Barron, Marco Battaglini, Alessandro Bonatti, Steve Coate, Jaksa Cvitanic, Jon Eguia, Bob Gibbons, Mitchell Hoffman, Matias Iaryczower, Navin Kartik, Roger Lagunoff, Jin Li, Niko Matouschek, Dilip Mookherjee, Tom Palfrey, Michael Powell, Patrick Rey, Andy Skrzypacz, Galina Vereshchagina, Leeat Yariv, seminar audiences at Caltech, Cornell, Microsoft Research, MIT, Northwestern, NYU, Stanford, UCLA, UIUC, USC, Yale, and participants at CRETE 2015, the Econometric Society World Congress 2015, GAMES 2016, INFORMS 2015, the 2015 Midwest Economic Theory Conference, SAET 2015, the 2016 SED Annual Meeting, Stony Brook Game Theory Festival Political Economy Workshop 2015, and SIOE 2016 for helpful comments and suggestions. Lambert gratefully acknowledges financial support from the National Science Foundation through grant CCF-1101209 The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
T. Renee Bowen & George Georgiadis & Nicolas S. Lambert, 2019. "Collective Choice in Dynamic Public Good Provision," American Economic Journal: Microeconomics, vol 11(1), pages 243-298. citation courtesy of