Tuesday, July 19, 2005

Coordinating Norms

Henry writes
For example, pledging that "Nicola will give 1% of [her] gross annual salary to charity but only if 400 other people will too." doesn't really make sense. Why does Nicola need 400 other people to also give to charity before she will? Isn't it a good thing to do even if 400 other people don't also give to charity? There are already well-established charities to contribute to and there is no issue of economies of scale.
You could work up an answer that really there are economy of scale issues here, we want lots more charity done and thus want lots of people helping lots of charity be done. The more serious reason why you would want this coordination mechanism is that you think it a social good that there be a norm that you give 1% of your incomes to charity. To just give it by yourself doesn't do much towards creating this norm, but getting 400 people to do so does, in a small way. So this one is about social norms, not free-riding (though social norms prevent free-riding on the macro-scale).


Blogger henry said...

I agree, that does seem to be why she is posting. But perhaps there are better ways to implement social norms?

The other thing you could argue is that this increases everyone's marginal benefit. If you give $100, 400 other people will too, thus your $100 turns into $40,000. Sort of why people agree to match or double others' donations.

I don't think that explanation avoids the free-rider problem though.

2:41 PM  

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