Free Riding on Altruism and Group Size

It is shown that altruism does not affect the equilibrium provision of public goods although altruism takes the form of unconditional commitment to contribute. The reason is that altruistic contributions completely crowd out selfish contributions. That is, egoists free ride on altruism. It is also shown that public goods are less likely to be provided in larger groups.Free Riding, Public good, Altruism

Schelling's Spatial Proximity Model of Segregation Revisited

Schelling [1969, 1971a, 1971b, 1978] presented a microeconomic model showing how an integrated city could unravel to a rather segregated city, notwithstanding relatively mild assumptions concerning the individual agents' preferences, i.e., no agent preferring the resulting segregation. We examine the robustness of Schelling's model, focusing in particular on its driving force: the individual preferences. We show that even if all individual agents have a strict preference for perfect integration, best-response dynamics will lead to segregation. What is more, we argue that the one-dimensional and two-dimensional versions of Schelling's spatial proximity model are in fact two qualitatively very different models of segregation.Neighborhood segregation, Myopic Nash Equilibria, Best-response dynamics, Markov chain, Limit-behavior.

Communication, Innovation, and Growth

The communication of ideas fosters technological progress and prevents regress. This paper develops a growth model wherein an economy's technology is endogenous to agents' communication decisions. In equilibrium, there is too little communication and insufficient risk-taking relative to the first best. The model can generate an abrupt take-off of output growth without an exogenous "catastrophe." A numerical example illustrates such a take-off. In that example, the endogenous fall in the cost of communication leads to the acceleration of the growth rate of output by facilitating the transmission of knowledge and by encouraging risk-taking.

Free riding on altruism and group size

It is shown that altruism does not affect the equilibrium provision of public goods although altruism takes the form of unconditional commitment to contribute. The reason is that altruistic contributions completely crowd out selfish voluntary contributions. That is, egoists free ride on altruism. It is also shown that public goods are less likely to be provided in larger groups. The only qualification to our results is when the probability of altruism is so high that it is a dominant strategy for all egoistic players to free ride. In this case, actually, both altruism and the larger group facilitate public good provision

Schelling's Spatial Proximity Model of Segregation Revisited

Neighborhood segregation, Myopic Nash Equilibria, Best-response dynamics, Markov chain, Limit-behavior