[x-posted to @[105172679576340:69:Ephemerisle (the discussion group, not the event)]]
Funding for non-exclusive communal art / infrastructure for events such as Ephemerisle/Burning Man suffer from similar incentive problems that plague other communally funded projects. Namely, the incentives for the individual are to refuse to contribute, yet hope that others donate enough to complete the project anyway. If successful, they can enjoy the benefits of the art/infrastructure, without paying any of the costs themselves.
This is called "free riding" by economists.
However, if too many people free ride, then the project doesn't get built at all, even though all would have benefited more than it cost, if it had been built.
@[837072795:2048:Alex Tabarrok] an economist at GMU, has proposed a mechanism for funding such projects that discourages free-riding called "dominant assurance contracts". (For the sake of brevity, I'll call them "domacs".)
Jameson Quinn explains how they work:
"An entrepreneur comes into town and says to each resident: "If you will hand me exactly $1100, I will do one of two things. If everyone else in town hands over the money, I will build the park, and take $1000 profit. If anyone in town refuses to hand over the money, I will come directly back and give you $1110; your contribution plus $10 for being a good sport." That is, anyone who makes a failed pledge earns a windfall profit of $10. That incentive means it's irrational not to pledge; the only Nash equilibrium is the one where the park is built."
Using a dominant assurance contract, Quinn was successfully able to raise $1260 dollars for the @[100064536826075:2048:The Center for Election Science]. Here's more on domacs and his results here:
https://metapolitics.quora.com/Matching-experiment-10x-your-impact-or-Ill-give-you-5-free
Of course, a domac doesn't guarantee that you will raise sufficient funds. People still might think your project is dumb, or lack confidence in you, or truly not believe it's worth the costs. However, domacs can help defeat the free riding problem.
As Quinn's example illustrates, the amount doesn't have to be a lot. Perhaps offering dominant assurance contracts would be a way to increase support for festival related art/infrastructure projects (Ephemerisle and otherwise)?
@[1110446586:2048:Tom W. Bell] @[585512667:2048:Joe Quirk]
Funding for non-exclusive communal art / infrastructure for events such as Ephemerisle/Burning Man suffer from similar incentive problems that plague other communally funded projects. Namely, the incentives for the individual are to refuse to contribute, yet hope that others donate enough to complete the project anyway. If successful, they can enjoy the benefits of the art/infrastructure, without paying any of the costs themselves.
This is called "free riding" by economists.
However, if too many people free ride, then the project doesn't get built at all, even though all would have benefited more than it cost, if it had been built.
@[837072795:2048:Alex Tabarrok] an economist at GMU, has proposed a mechanism for funding such projects that discourages free-riding called "dominant assurance contracts". (For the sake of brevity, I'll call them "domacs".)
Jameson Quinn explains how they work:
"An entrepreneur comes into town and says to each resident: "If you will hand me exactly $1100, I will do one of two things. If everyone else in town hands over the money, I will build the park, and take $1000 profit. If anyone in town refuses to hand over the money, I will come directly back and give you $1110; your contribution plus $10 for being a good sport." That is, anyone who makes a failed pledge earns a windfall profit of $10. That incentive means it's irrational not to pledge; the only Nash equilibrium is the one where the park is built."
Using a dominant assurance contract, Quinn was successfully able to raise $1260 dollars for the @[100064536826075:2048:The Center for Election Science]. Here's more on domacs and his results here:
https://metapolitics.quora.com/Matching-experiment-10x-your-impact-or-Ill-give-you-5-free
Of course, a domac doesn't guarantee that you will raise sufficient funds. People still might think your project is dumb, or lack confidence in you, or truly not believe it's worth the costs. However, domacs can help defeat the free riding problem.
As Quinn's example illustrates, the amount doesn't have to be a lot. Perhaps offering dominant assurance contracts would be a way to increase support for festival related art/infrastructure projects (Ephemerisle and otherwise)?
@[1110446586:2048:Tom W. Bell] @[585512667:2048:Joe Quirk]