Dynamic public good provision under time preference heterogeneity
Philip Trammell (Global Priorities Institute and Department of Economics, University of Oxford)
GPI Working Paper No. 9-2021
I explore the implications of time preference heterogeneity for the private funding of public goods. The assumption that players use a common discount rate is knife-edge: relaxing it yields substantially different equilibria, for two reasons. First, time preference heterogeneity motivates intertemporal polarization, analogous to the polarization seen in a static public good game. In the simplest settings, more patient players spend nothing early in time and less patient players spending nothing later. Second, and consequently, time preference heterogeneity gives less patient players a “first-mover advantage”. Departures from the common-discounting assumption are economically significant: a patient player’s payoff in equilibrium, relative to that obtained when he is constrained to act according to a higher discount rate, typically grows unboundedly as his share of the initial budget falls to zero. Finally I discuss applications of these results to the debate over legal disbursement minima.
Other working papers
How effective is (more) money? Randomizing unconditional cash transfer amounts in the US – Ania Jaroszewicz (University of California San Diego), Oliver P. Hauser (University of Exeter), Jon M. Jachimowicz (Harvard Business School) and Julian Jamison (University of Oxford and University of Exeter)
We randomized 5,243 Americans in poverty to receive a one-time unconditional cash transfer (UCT) of $2,000 (two months’ worth of total household income for the median participant), $500 (half a month’s income), or nothing. We measured the effects of the UCTs on participants’ financial well-being, psychological well-being, cognitive capacity, and physical health through surveys administered one week, six weeks, and 15 weeks later. While bank data show that both UCTs increased expenditures, we find no evidence that…
High risk, low reward: A challenge to the astronomical value of existential risk mitigation – David Thorstad (Global Priorities Institute, University of Oxford)
Many philosophers defend two claims: the astronomical value thesis that it is astronomically important to mitigate existential risks to humanity, and existential risk pessimism, the claim that humanity faces high levels of existential risk. It is natural to think that existential risk pessimism supports the astronomical value thesis. In this paper, I argue that precisely the opposite is true. Across a range of assumptions, existential risk pessimism significantly reduces the value of existential risk mitigation…
Can an evidentialist be risk-averse? – Hayden Wilkinson (Global Priorities Institute, University of Oxford)
Two key questions of normative decision theory are: 1) whether the probabilities relevant to decision theory are evidential or causal; and 2) whether agents should be risk-neutral, and so maximise the expected value of the outcome, or instead risk-averse (or otherwise sensitive to risk). These questions are typically thought to be independent – that our answer to one bears little on our answer to the other. …