by David P Myatt and Chris Wallace.
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forthcoming: Economic Journal 119(534), pp. 61-90, January 2009.
Abstract: A classic collective-action problem arises when private actions generate common consequences; for example, the private provision of a public good. In the context of a collective-action game, this paper asks: what shapes of public-good production function work well in the long run? Here, the “long run” corresponds to the behaviour of players engaged in a strategy-revision process which allows play to evolve over time, and hence move between equilibria. Welfare-maximising public-good production functions are those which yield nothing when the combined effort of players falls below some threshold, but otherwise maximally exploit the production-possibility frontier. Such production functions lead to games with multiple equilibria: coordinated teamwork is an integral component of successful collective actions. However, the optimal threshold is not too ambitious: when strategy revisions approximate best replies, it corresponds to the output that an individual who pays all private costs but enjoys only private bene?ts would be just willing to provide.
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