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We investigate Groves mechanisms for economies where (i) a social outcome specifies a group of winning agents, and (ii) a cost function associates each group with a monetary cost. In particular, we characterize both (i) the class of cost functions for which there are Groves mechanisms such that the agents cover the costs through voluntary payments, and (ii) the class of cost functions for which there are envy-free Groves mechanisms. It follows directly from our results that whenever production efficient and envy-free allocations can be implemented in dominant strategies, this can moreover be done while funding production through voluntary payments.

This paper extends the classic two-armed bandit problem to a many-agent setting in which N players each face the same experimentation problem. The main change from the single-agent problem is that an agent can now learn from the current experimentation of other agents. Information is therefore a public good, and a free-rider problem in experimentation naturally arises. More interestingly, the prospect of future experimentation by others encourages agents to increase current experimentation, in order to bring forward the time at which the extra information generated by such experimentation becomes available. The paper provides an analysis of the set of stationary Markov equilibria in terms of the free-rider effect and the encouragement effect.

We propose a design for philanthropic or publicly funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from quadratic voting to a funding mechanism for endogenous community formation. Citizens make contributions to public goods of value to them. The amount received by the public good is (proportional to) the square of the sum of the square roots of contributions received. Under the “standard model,” this mechanism yields first best public goods provision. Variations can limit the cost, help protect against collusion, and aid coordination. We discuss applications to campaign finance and highlight directions for future analysis and experimentation. This paper was accepted by Joshua Gans, business strategy.

Social control and the enforcement of social norms glue a society together. It has been shown theoretically and empirically that informal punishment of wrongdoers fosters cooperation in human groups. Most of this research has focused on voluntary and uncoordinated punishment carried out by individual group members. However, as punishment is costly, it is an open question as to why humans engage in the punishment of wrongdoers even in one-time-only encounters. While evolved punitive preferences have been advocated as proximate explanations for such behaviour, the strategic nature of the punishment situation has remained underexplored. It has been suggested to conceive of the punishment situation as a volunteer's dilemma (VOD), where only one individual's action is necessary and sufficient to punish the wrongdoer. Here, we show experimentally that implementing the punishment situation as a VOD sustains cooperation in an environment where punishers and non-punishers coexist. Moreover, we show that punishment-cost heterogeneity allows individuals to tacitly agree on only the strongest group member carrying out the punishment, thereby increasing the effectiveness and efficiency of social norm enforcement. Our results corroborate that costly peer punishment can be explained without assuming punitive preferences and show that centralized sanctioning institutions can emerge from arbitrary individual differences.

Cultural group selection theorists propose that humans evolved prosocial preferences. These claims revolve largely around the centrality of punishment in cultural groups, which helped to eliminate free riders. The purpose of this paper is to explore whether distinguishing between free-riding as an action, and free riders as entities, undermines or supports this view. I develop three individual-based models of the Prisoner’s Dilemma. The first model shows that strong reciprocity removes overt freeriders from a population, and maintains a high rate of cooperation. In the second, I introduce individuals that mimic cooperative preferences, but who defect when they trick opponents into cooperating. I show that strong reciprocity is robust against this strategy, but not because individuals are replaced by strong reciprocators. Finally, I introduce a third strategy, covert mimicry, where some mimics may defect without detection. I draw attention to the problem highlighted in these models, which is that cooperation may be maintained in populations only because freeriders are not presented with the opportunity to defect. I discuss this problem in the context of cultural group selection and the human capacity for innovation, and suggest that hypotheses relying on prosocial preferences for maintaining cooperation require some revision.

Why do Internet, financial service, and beer commercials dominate Super Bowl advertising? How do political ceremonies establish authority? Why does repetition characterize anthems and ritual speech? Why were circular forms favored for public festivals during the French Revolution? This book answers these questions using a single concept: common knowledge. Game theory shows that in order to coordinate its actions, a group of people must form \"common knowledge.\" Each person wants to participate only if others also participate. Members must have knowledge of each other, knowledge of that knowledge, knowledge of the knowledge of that knowledge, and so on. Michael Chwe applies this insight, with striking erudition, to analyze a range of rituals across history and cultures. He shows that public ceremonies are powerful not simply because they transmit meaning from a central source to each audience member but because they let audience members know what other members know. For instance, people watching the Super Bowl know that many others are seeing precisely what they see and that those people know in turn that many others are also watching. This creates common knowledge, and advertisers selling products that depend on consensus are willing to pay large sums to gain access to it. Remarkably, a great variety of rituals and ceremonies, such as formal inaugurations, work in much the same way. By using a rational-choice argument to explain diverse cultural practices, Chwe argues for a close reciprocal relationship between the perspectives of rationality and culture. He illustrates how game theory can be applied to an unexpectedly broad spectrum of problems, while showing in an admirably clear way what game theory might hold for scholars in the social sciences and humanities who are not yet acquainted with it. In a new afterword, Chwe delves into new applications of common knowledge, both in the real world and in experiments, and considers how generating common knowledge has become easier in the digital age.

We propose an envy‐free team project called “color team project”. The primary motivation behind this approach is to prevent free‐rider behavior and create a fair evaluation system that avoids jealousy among team members. In the team project, each team member indicates their contribution to the final team output using a color or their name. To evaluate the color team project, we use the number of pixels as the decision matrix, which includes pixels from the entire work (“All”), the methodology section (“Methodology”), the experimental section (“Results”), and the “Title”. The attribute weight is determined through steps that include standardization and information entropy. We then determine the ranking order of a team project using either the Simple Additive Weighting (SAW) method or the Technique for Order Preference by Similarity to an Ideal Solution (TOPSIS) method, and it is verified by the analytic hierarchy process (AHP) method. By applying the color team project, we can overcome the free‐rider problem and maintain the positive aspects of team projects, such as effective communication, collaboration, and negotiation.

COVID-19 vaccine mandates are in place or being debated across the world. Standard neoclassical economics argues that the marginal social benefit from vaccination exceeds the marginal private benefit; everyone vaccinated against a given infectious disease protects others by not transmitting the disease. Consequently, private levels of vaccination will be lower than the socially optimal levels due to free-riding, which requires mandates to overcome the problem. We argue that universal mandates based on free-riding are less compelling for COVID-19. We argue that because the virus can be transmitted even after receiving the vaccine, most of the benefits of the COVID-19 vaccine are internalized: vaccinated individuals are protected from the worst effects of the disease. Therefore, any positive externality may be inframarginal or policy irrelevant. Even when all the benefits are not internalized by the individual, the externalities mainly are local, mostly affecting family and closely associated individuals, requiring local institutional (private and civil society) arrangements to boost vaccine rates, even in a global pandemic. Economists and politicians must justify such universal vaccine mandates on some basis other than free-riding.

This essay provides a comprehensive and critical introduction to ideology. It traces the origins and development of various conceptions of ideology, articulating both what they have in common and their differences. Among the distinctions that we develop are the contrasts between pejorative and nonpejorative conceptions, functionalist and causal conceptions, and conceptions that limit ideologies to supporting existing oppressive orders and those that allow for ideologies that challenge such orders. We also explain the role that ideologies can play in either preventing or facilitating social movements to overturn or improve existing institutions. The concluding section of this essay provides a list of important topics for future research on ideology and emphasizes that, in each case, an interdisciplinary approach is needed to understand them fully.

We study the strategic pricing decision models of manufacture-led dual-channel supply chains with the free-rider problem under the service level and cost. We use the Stackelberg model to study the impact of the degree with the free-rider problem of consumers on the optimal pricing strategy and the optimal service level of the dual-channel supply chain under various decision-making modes and carry out a numerical simulation. The main conclusions are as follows: In the retailer’s dual-channel supply chain, the deepening of consumer free-riding behavior will reduce the enthusiasm of retailers, but the weak position of the channel will lead to improved service levels and reduced prices, as well as to increase the wholesale price to cover costs. In the manufacturer’s dual-channel supply chain, the deepening of consumer free-riding behavior will lead to a decline in the retailers’ service level and enthusiasm, as well as to a decrease in the wholesale prices and retailers’ pricing. In the two types of dual-channel supply chains, the demand of manufacturers’ network channels increases, the price increases first and then decreases, and the profits of all supply chain members decrease with the increase in the free-rider coefficient of consumers. Finally, we use numerical simulation to verify the validity of the above conclusions, which provides a scientific basis to make optimal pricing decisions in the manufacturer-led dual-channel supply chain.