Chapter 3 — Competitive Altruism in Public Goods Provision

Abstract

We develop a model in which players simultaneously choose effort levels to contribute to a public good and form links to access the contributions of others. The framework incorporates competitive altruism: players derive reputational benefits from contributing more than their neighbors. We characterize equilibrium outcomes and identify conditions under which isolated effort or networked structures emerge.

For small networks, we show that multiple configurations — star, circle, and complete graphs — can each arise as equilibria, with total social welfare varying across structures and depending on the cost of link formation. Our analysis reveals that the most socially efficient network is not always an equilibrium, highlighting a persistent divergence between strategic stability and social optimality. These results point to the potential value of coordination mechanisms in guiding networks toward efficient outcomes.