48/2011 Kimberley Scharf

We describe a model of fundraising in social groups, where private information about quality of provision is transmitted by social proximity. Individuals engage in voluntary provision of a pure collective good that is consumed by both neighbours and non-neighbours. We show that, unlike in the case of private goods, better informed individuals face positive incentives to incur a cost to share information with their neighbours. These incentives are stronger, and provision of the pure public good greater, the smaller are individuals’ social neighbourhoods.

Behavioural Economics and Wellbeing

International Economic Review

http://dx.doi.org/10.1111/iere.12081