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Title:Pareto meets Olson: A note on Pareto-optimality and group size in linear public goods games PDF Logo
Authors:Pickhardt, Michael
Issue Date:2011
Series/Report no.:CAWM discussion paper / Centrum für Angewandte Wirtschaftsforschung Münster 48
Abstract:In this paper I examine the relationship between Pareto-optimality and group size in linear public goods games or experiments. In particular, I use the standard setting of homogeneous linear public goods experiments and apply a recently developed tool to identify all Pareto-optimal allocations in such settings. It turns out that under any conceivable circumstances, ceteris paribus, small groups have a higher Pareto-ratio (Pareto-optimal allocations over total allocations) than large groups. Hence, if Pareto-optimality of an allocation is a property that makes such allocations acceptable and maintainable, small groups will find is easier to provide Pareto-optimal amounts of a public good than large groups. This is a novel reasoning for Mancur Olson's claim, in particular, with respect to what he has termed inclusive goods and inclusive groups.
Subjects:Olson
Pareto
public goods
Pareto-optimality
linear public goods experiments
inclusive groups
JEL:H41
C90
B31
Document Type:Working Paper
Appears in Collections:CAWM Discussion Papers, Universität Münster

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