Andreas Lange (University of Hamburg):"On the voluntary provision of public goods in overlapping neighborhoods".

Abstract:

We investigate the voluntary provision of public goods in spatial setting. The paper is inspired by ideas of policymakers advocating mixed neighborhoods and the general problem of public goods benefiting some groups relatively more than others. We introduce a spatial variant of a classical public good game that allows for overlapping neighborhoods. Our findings show that participants do invest in others' locations, yet mainly in a way in which they themselves benefit, i.e. in locations of their direct neighbors. In networks where rich and poor are clustered, we observe that it is the rich located at the border who trigger the redistribution to the poor cluster. Apart from equity concerns, we observe that participants are motivated by reciprocity as they reduce (increase) investments and thus punish (reward) neighbors who contributed less (more). We finally compare the findings in a typical summation technology for the production of public goods with a setting where the provision is governed by the weakest link