Working paper

Private provision of public goods and information diffusion in social groups

Publisher
Information technology Great Britain
Description

There is evidence that social interactions matter for charitable giving. This paper describes 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 neighbors and non-neighbors. 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 neighbors. These incentives are stronger, and provision of the pure public good greater, the smaller are individuals' social neighborhoods.

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