Volunteer's Dilemma: Cost-Sharing Revisited

Abstract

This paper revisits the well-known volunteer’s dilemma on the production of a collective good when a single participant is sufficient for the task. We propose a cost-sharing model with a volunteering cost that decreases exponentially in the number of volunteers. We show that, at the unique mixed-strategy equilibrium, the probability of production may increase in the number of players for sufficiently low volunteering costs. This provides an alternative account of the fit of the model with some real-life situations and a better fit with the associated experimental results, that is, a larger group does erode the individual incentive to volunteer but in an offsetting way that favors the production of the collective good. A second result is that the mixed-strategy equilibrium may be more socially efficient than the pure-strategy equilibrium for some parameter values, which is a major reversal with respect to the standard dilemma and many other coordination games.