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Do positional preferences cause welfare gains?

Douadia Bougherara 1 Sandrine Costa 2 Gilles Grolleau 1, 3 Lisette Ibanez 1
1 CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010
2 UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs
3 BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)
Abstract : 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.
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https://halshs.archives-ouvertes.fr/halshs-02137164
Contributor : Laurent Garnier <>
Submitted on : Wednesday, May 22, 2019 - 5:18:06 PM
Last modification on : Wednesday, November 4, 2020 - 3:35:25 AM

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INRA | CNRS | AGROPOLIS | CIRAD | ECON | UNIV-MONTPELLIER | CEE-M | MONTPELLIER-SUPAGRO | INRAE

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Douadia Bougherara, Sandrine Costa, Gilles Grolleau, Lisette Ibanez. Do positional preferences cause welfare gains?. Economics Bulletin, Economics Bulletin, 2019, 39 (2), pp.1228-1241. ⟨halshs-02137164⟩

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