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:

Fundable reminds me a little of the (failed:,, etc.) group shopping phenomena, but far more general.

18 Responses

  1. 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 (scroll down to ‘Information Markets and Social Policy Bonds’.

  2. ‘Scroll down’ isn’t going to work unless you stop posting. The permalink you meant to provide is

  3. […] 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 &#8 […]

  4. […] 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 […]

  5. […] 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. […]

  6. […] 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. […]

  7. […] I’d also prefer to give via some innovative mechanism. We’ll see what the new year brings. […]

  8. […] Hopefully they’ll have great success and pursue interesting mechanisms for funding public goods. […]

  9. […] 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. […]

  10. […] $100 million could fund a huge amount of new free content, free software, free infrastructure and supporting institutions, begetting more of the same. […]

  11. […] 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 […]

  12. […] 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) […]

  13. […] 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. […]

  14. […] 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 […]

  15. […] Tabbarok (who I’ve mentioned before on the related problem of private provision of public goods provides a summary of Ostrom’s work on the well-governed commons. Here’s […]

  16. […] Public Goods Group Shopping and Kragen Sitaker on Dominant Assurance Contracts. Assurance contracts do fine for funding simple consumer products but have never addressed any political problems, and a handwaving assertion that many political problems can be thought of as public goods problems does not make it any more feasible for this to occur. The additional capital and mechanics required by dominant assurance contracts make them a merely cute idea. […]

  17. […] been eager to see more nuanced crowdfunding arrangements tried since before relatively simple one-off […]

Leave a Reply