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.
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’.
‘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
“Using Fundable to Fund Fundable!” http://www.userdriven.com/2005/05/userdriven_fund.html
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