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Non-governmental public norm enforcement in large societies as a two-stage game of voluntary public good provision


Buchholz, Wolfgang; Falkinger, Josef; Ruebbelke, Dirk (2014). Non-governmental public norm enforcement in large societies as a two-stage game of voluntary public good provision. Journal of Public Economic Theory, 16(6):899-916.

Abstract

In small groups, norm enforcement is achieved through mutual punishment and reward. In large societies, norms are enforced by specialists such as government officials. However, not every public cause is overseen by states, for instance those organized at the international level. This paper shows how non-governmental norm enforcement can emerge as a decentralized equilibrium. As a first stage, individuals voluntarily contribute to a non-governmental agency that produces an incentive system. The second stage is the provision of a public good on the basis of private contributions. The incentive system increases contributions by means of public approval or disapproval of behavior. It is shown that, even in large populations, non-governmental norm enforcement can be supported in a non-cooperative equilibrium of utility-maximizing individuals. This result is in sharp contrast to those obtained in the standard situation of voluntary provision of an intrinsic public good which – without altruism or related motives – is eroded by free-riding. Reliance on altruistic behavior is not required in supplying the second-order public good ‘norm enforcement’ in large societies.

Abstract

In small groups, norm enforcement is achieved through mutual punishment and reward. In large societies, norms are enforced by specialists such as government officials. However, not every public cause is overseen by states, for instance those organized at the international level. This paper shows how non-governmental norm enforcement can emerge as a decentralized equilibrium. As a first stage, individuals voluntarily contribute to a non-governmental agency that produces an incentive system. The second stage is the provision of a public good on the basis of private contributions. The incentive system increases contributions by means of public approval or disapproval of behavior. It is shown that, even in large populations, non-governmental norm enforcement can be supported in a non-cooperative equilibrium of utility-maximizing individuals. This result is in sharp contrast to those obtained in the standard situation of voluntary provision of an intrinsic public good which – without altruism or related motives – is eroded by free-riding. Reliance on altruistic behavior is not required in supplying the second-order public good ‘norm enforcement’ in large societies.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:December 2014
Deposited On:30 Oct 2013 10:56
Last Modified:01 Jan 2017 01:00
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:1097-3923
Additional Information:See also Working Paper Series in Economics and Econometrics, No. 566.
Publisher DOI:https://doi.org/10.1111/jpet.12084
Related URLs:http://dx.doi.org/10.5167/uzh-67107

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