Applied Seminar

Speaker: Tomasso Reggiani (Cardiff)

Title: Coordinated selection of collective action: Focusing on the interests of the wealthy

Format: Hybrid

Homepage:  Tommaso Reggiani (google.com)

Organiser: Uta

Abstract:We extend a collective action problem to study policy and project selection by heterogeneous groups who prefer to work together on a joint project but may disagree on which project is best. Our framework, adapted from a model of multiple threshold public goods, presents groups with several mutually exclusive projects, any of which succeeds only if it receives sufficient support from the group. Individuals strictly prefer to do their part to ensure the success of whatever joint project they believe others are also focused on. Groups tend to coordinate on the public good preferred by their wealthiest member, demonstrating a wealthy-interest bias even without corruption, politics, and information asymmetries. At the same time, groups divide costs in highly progressive ways, with the wealthy voluntarily funding a disproportionate share. Groups successfully funding the public good preferred by their wealthiest member are characterized by lower inequality and higher profits than those exhibiting lower ability to coordinate contributions. We discuss the implications of our experimental findings for policy selection, charitable giving, and taxes.