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Douadia Bougherara, Sandrine Costa, Gilles Grolleau and Lisette Ibanez
''Do positional preferences cause welfare gains?''
( 2019, Vol. 39 No.2 )
We examine conditions for which positional preferences for voluntary contribution to a public good can be welfare enhancing in a one-shot public good game, where individuals may also enjoy a return from their contribution ranking. We show that positional preferences are welfare-increasing only under certain conditions. We find that when agents' positional preferences are homogeneous, they overinvest in the public good compared to equilibrium with no positional preferences, resulting in a zero-sum positional race with a higher public good provision. When agents have heterogeneous positional preferences, the overall impact on social welfare is positive when endowments are homogeneous.
Keywords: Position, Public goods, Status
JEL: H4 - Publicly Provided Goods: General
D6 - Welfare Economics: General
Manuscript Received : Apr 23 2018 Manuscript Accepted : May 15 2019

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