Voluntary Participation in a Mechanism Implementing a Public Project

In this study, a participation game in a mechanism to implement a public project is considered; in this game, agents decide simultaneously whether they will participate in the mechanism or not. We characterize the sets of participants at strict Nash equilibria, strong equilibria, and coalition-proof equilibria of the participation game. The three sets of equilibria are shown to coincide and exist. All the equilibrium allocations are Pareto efficient at any one of three notions of equilibria. However, if the public good can be provided in multiple units or if there are multiple projects, then these sets may fail to coincide.Participation game, Public project, Strong equilibrium, Coalition-proof equilibrium, Multi-unit public good, Multiple projects

Coalition-structured governance improves cooperation to provide public goods

While the benefits of common and public goods are shared, they tend to be scarce when contributions are provided voluntarily. Failure to cooperate in the provision or preservation of these goods is fundamental to sustainability challenges, ranging from local fisheries to global climate change. In the real world, such cooperative dilemmas occur in multiple interactions with complex strategic interests and frequently without full information. We argue that voluntary cooperation enabled across overlapping coalitions (akin to polycentricity) not only facilitates a higher generation of non-excludable public goods, but it may also allow evolution toward a more cooperative, stable, and inclusive approach to governance. Contrary to any previous study, we show that these merits of multi-coalition governance are far more general than the singular examples occurring in the literature, and they are robust under diverse conditions of excludability, congestion of the non-excludable public good, and arbitrary shapes of the return-to-contribution function. We first confirm the intuition that a single coalition without enforcement and with players pursuing their self-interest without knowledge of returns to contribution is prone to cooperative failure. Next, we demonstrate that the same pessimistic model but with a multi-coalition structure of governance experiences relatively higher cooperation by enabling recognition of marginal gains of cooperation in the game at stake. In the absence of enforcement, public-goods regimes that evolve through a proliferation of voluntary cooperative forums can maintain and increase cooperation more successfully than singular, inclusive regimes.Supported by US Defense Advanced Research Projects Agency (D17AC00005), National Science Foundation grant GEO-1211972, and Fundacao para a Ciencia e Tecnologia (FCT) through grants PTDC/MAT/STA/3358/2014, PTDC/EEI-SII/5081/2014, and UID/BIA/04050/2013. P.M.H. was supported by the Walbridge Fund at the Princeton Environmental Institute

On the Provision of Public Goods on Networks: Incentives, Exit Equilibrium, and Applications to Cyber .

Attempts to improve the state of cyber-security have been on the rise over the past years. The importance of incentivizing better security decisions by users in the current landscape is two-fold: it not only helps users protect themselves against attacks, but also provides positive externalities to others interacting with them, as a protected user is less likely to become compromised and be used to propagate attacks against other entities. Therefore, security can be viewed as a public good. This thesis takes a game-theoretic approach to understanding the theoretical underpinnings of users' incentives in the provision of public goods, and in particular, cyber-security. We analyze the strategic interactions of users in the provision of security as a non-excludable public good. We propose the notion of exit equilibrium to describe users' outside options from mechanisms for incentivizing the adoption of better security decisions, and use it to highlight the crucial effect of outside options on the design of incentive mechanisms for improving the state of cyber-security. We further focus on the general problem of public good provision games on networks. We identify necessary and sufficient conditions on the structure of the network for the existence and uniqueness of the Nash equilibrium in these games. We show that previous results in the literature can be recovered as special cases of our result. We provide a graph-theoretical interpretation of users' efforts at the Nash equilibria, Pareto efficient outcomes, and semi-cooperative equilibria of these games, by linking users' effort decisions to their centralities in the interaction network. Using this characterization, we separate the effects of users' dependencies and influences (outgoing and incoming edges, respectively) on their effort levels, and uncover an alternating effect over walks of different length in the network. We also propose the design of inter-temporal incentives in a particular type of security games, namely, security information sharing agreement. We show that either public or private assessments can be used in designing incentives for participants to disclose their information in these agreements. Finally, we present a method for crowdsourcing reputation that can be useful in attaining assessments of users' efforts in security games.PhDElectrical Engineering: SystemsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/133328/1/naghizad_1.pd

On financing global and international public goods

Three dimensions of public goods--nonrivalry of benefits, the possibility of being excluded from benefits, and the technology for aggregating public supply--determine what kinds of institutions and transnational actions are required for their provision and financing. For some public goods--especially for those for which the exclusion of nonpayers is not feasible--these properties are such that a public sector push is needed or the good will not be financed. This push can come from a supranational structure (such as the World Bank, the United Nations, or the European Union) that directly or indirectly collects the requisite fees from its members to underwrite international public goods (IPGs). To understand the role of international institutions in promoting IPGs, one must ascertain the nature of the good and whether it requires a push, a coax, or no assistance from a supranational structure or influential nation(s) and agents (such as charitable foundations). The transnational community should explicitly direct scarce resources only to those global and international public goods that need either a significant push or only a smaller coax by the transnational community. When clubs or markets can finance international public goods, the community should sit back and let incentives guide the actions of sovereign nations.Decentralization,Environmental Economics&Policies,Economic Theory&Research,Labor Policies,Payment Systems&Infrastructure,Environmental Economics&Policies,Economic Theory&Research,Economic Stabilization,Public Sector Economics&Finance,Carbon Policy and Trading

Global and regional public goods: a prognosis for collective action

This paper applies modern concepts from the theory of public goods to indicate why progress has been made with respect to some global and regional public goods (for example, cutting sulphur emissions) but not with respect to others (for example, cutting greenhouse gases). Factors promoting collective action at the transnational level include the removal of uncertainty, a high share of nation-specific benefits, a limited number of essential participants and the presence of an influential leader nation. The impact of public good aggregation technologies on the future provision of transnational public goods is related to the trend in world-wide income inequality. Principles are presented for designing supranational structures for addressing transnational public good problems.

Contributing or Free-Riding? A Theory of Endogenous Lobby Formation

We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government’s choice on the level of provision of public goods. Using perfectly coalition-proof Nash equilibrium (Bernheim, Peleg and Whinston, 1987 JET), we show that the set of equilibrium outcomes is equivalent to an "intuitive" hybrid solution concept, the free-riding-proof core, which is always nonempty but does not necessarily achieve global efficiency. It is not necessarily true that an equilibrium lobby group is formed by the players with highest willingness-to-pay, nor is it a consecutive group with respect to their willingnesses-to-pay. We also show that the equilibrium level of public goods provision shrinks to zero as the economy is replicated.Common Agency, Public Good, Free Rider, Core, Lobby, Coalition Formation, Coalition-proof Nash Equilibrium

Globalisation and National Incentives for Protecting Environmental Goods

This article tries to explain national incentives for protecting environmental goods either autonomously or collectively; it explores how globalisation has affected those incentives; and it suggests how national environmental policy might respond so as to ensure its effectiveness. The central argument is that national incentives for environmental protection may to a considerable extent be explained by a combination of the type of environmental good to be protected (in terms of public goods theory) and the effects of environmental protection measures on international competitiveness. Arrangements for protecting environmental goods can be ranked according to their centripetal effects on non-participating countries. Centripetal effects are strongest in the case of club goods (1), followed by private goods (2), public goods (3), and common pool resources (4). The centripetal effects resulting from the type of environmental good can be further reinforced by competitive advantages resulting from environmental protection measures; they can be weakened by competitive disadvantages; or they can remain unchanged due to competitive neutrality. The combination of four types of environmental goods and three types of competitive effects (positive, negative, neutral) results in twelve possible cases, with differing national incentives for autonomous and collective environmental protection. Given specific assumptions, these twelve cases can be ranked with regard to the severity of collective action problems they involve. The article includes a short empirical illustration for each case. It also analyses how globalisation (in the form of increasing trade) and some of its driving forces (in the form of free trade agreements) influence national incentives and legal possibilities for environmental protection. This article concludes with a brief discussion of four options for (re-)expanding the action space for national environmental policies under the condition of economic globalisation.

Financing the Provision of Global Public Goods

global public goods, international organizations, aid, externality, Global Environment Facility

If you build it, they wille come : applying the lessons of collective action theory to the 1991 Persian Gulf War

La théorie de l'action collective a été appliquée aux problèmes de la répartition du fardeau entre les alliés et le financement des biens publics internationaux. Bien que la littérature concernant la théorie économique de l'action collective ait évolué, sa mise en application dans le domaine des relations internationales a stagné. Plusieurs questions de sécurité internationale se situent au niveau régional et mettent en jeu des biens collectifs rivaux et exclusifs. Ces questions de sécurité collective peuvent être reformulées en terme théorique comme "biens d'association". Les biens d'association ont tendance à être fourni efficacement. Une étude de cas portant sur la Guerre du Golfe de 1991 semble démontrer la pertinence de l'action collective et la théorie de club dans le cadre de coalitions militaires internationales. La théorie de l'action collective explique certaines relations causales déterminant le succès de la création de coalitions. Le leadership d'un acteur dominant peut forcer ses alliés à révéler leurs préférences et à payer en fonction de celles-ci. La technologie de l'agrégation de forces militaires pour mener une guerre offensive permet le remboursement si l'agrégation nécessaire n'est pas achevée, changeant ainsi le calcul des coûts-bénéfices. Cette technologie diminue le risque associé au leadership dans l'action collective et augmente ainsi la possibilité de coopération