Public Goods Group Shopping
Discussing Fundable, Alex Tabarrok explains assurance contracts and cites his improvement, dominant assurance contracts (emphasis in original, link added):
In a dominant assurance contract if the group goal is not met then everyone who offered to contribute is given their money back plus a bonus. It turns out that it then becomes a dominant strategy to contribute and the public good is always provided!
Very interesting. I’ve mentioned before in passing that many political problems can be thought of as public goods problems.
I’d really like to see some analysis of what sorts of public goods are amenable to provision via dominant assurance contracts and then implementation. The only other instances of “dominant assurance contract(s)” I can find are in Zane Spindler’s pedagogical A Tale of Twin Cities: A Parable in Urban Political Economy! and this which indicates that Tabarrok was working on a book on the subject ten years ago. I hope someone else follows up.
I’m also interested in further analysis of other proposed mechanisms for funding the production of public goods, including how their “payoff” would be effected by the addition of a failure bonus:
- FairShare (I summarized here)
- Street Performer Protocol
- Wall Street Performer Protocol (Software Completion Bonds)
- Social Policy Bonds
- Science & Engineering Prizes (I mentioned briefly at the end of this post)
Fundable reminds me a little of the (failed: mobshop.com, mercata.com, etc.) group shopping phenomena, but far more general.
May 19th, 2005 at 1:46
Robert Hahn of AEI-Brookings looks briefly at Social Policy Bonds in his paper ‘Using Information Markets to Improve Policy’. I respond to his comments on my blog at http://SocialGoals.com/blog/blog.html (scroll down to ‘Information Markets and Social Policy Bonds’.
May 23rd, 2005 at 12:25
‘Scroll down’ isn’t going to work unless you stop posting. The permalink you meant to provide is http://socialgoals.com/blog/2005/05/information-markets-and-social-policy.html
June 3rd, 2005 at 0:43
“Using Fundable to Fund Fundable!” http://www.userdriven.com/2005/05/userdriven_fund.html
June 5th, 2005 at 0:18
[...] on of the budget if and only if enough others make similar arrangements. Now I learn from Mike Linksvayer that this concept has a name — assurance contracts  [...]
June 5th, 2005 at 12:17
[...] public goods, especially free software. My first post on dominant assurance contracts is here. A few thoughts regarding Kragen’s analysis follow. On public go [...]
July 21st, 2005 at 0:14
[...] An assurance contract returns contributions (or cancels pledges) in case the amount requested is not raised. A dominant assurance contract returns contributions plus a failure payoff or refund bouns, making it worthwhile for interested parties to contribute even if they believe the contribution threshold will not be met. Both concepts could easily be applied to reverse bounties. [...]
October 18th, 2005 at 21:47
[...] The authors also do not describe a world completely without copyright, offering creators a one-year exclusive right to exploit new works commercially (a one-year usufruct as they say) where the work demands sizeable initial investments. An unfortunate proposal: to protectionists, a ridicuously constrained mononpoly, but one that undermines the authors’ vision. Better to use the paragraph to mention ideas for financing of artistic works that do not require monopoly privilege. Or to mention peer production, open source, or free software, which they do not. [...]
December 30th, 2005 at 17:51
[...] I’d also prefer to give via some innovative mechanism. We’ll see what the new year brings. [...]
April 11th, 2006 at 15:39
[...] Hopefully they’ll have great success and pursue interesting mechanisms for funding public goods. [...]
May 28th, 2006 at 14:22
[...] They could’ve made it even easier to sign up by offering a greater than 100% refund in case the project does not go ahead. [...]
October 22nd, 2006 at 18:48
[...] $100 million could fund a huge amount of new free content, free software, free infrastructure and supporting institutions, begetting more of the same. [...]
March 10th, 2007 at 12:56
[...] about FairShare, Fundable and related ideas several times in the past, mostly linked to in my Public Goods Group Shopping post and its comments. The field is ripe for a really good [...]
October 10th, 2007 at 16:20
[...] Public Goods Group Shopping Mike L on how refundable Street Performer Protocol encourages donation and makes finishing work more likely. (tags: economics street-performer-protocol) [...]
December 25th, 2007 at 18:40
[...] This closing both gives comfort to producerists (but in the beginning of the essay Friedman says that people love to create — I agree, see paying to create — and Tom W. Bell has a separate argument that should result in less concern for producers that I’ve been meaning to blog about, but should be obvious from the title — Outgrowing Copyright: The Effect of Market Size on Copyright Policy) and is a stretch — copyright might make alternatives less pressing and interesting, but it certainly does not prevent experimentation. [...]
April 12th, 2008 at 10:49
[...] by large businesses employing many programmers following these models. Well, except for the last one, which has turned out to be insignificant so far, though perhaps there remains lots of [...]