Alex Tabarrok - Prizes, Prices, and Public Goods
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Assurance Contracts
Dominant assurance contracts offer a novel solution to the public good provision problem, a challenge long deemed unsolvable by economists like Paul Samuelson. explains that these contracts incentivize contributions by offering a refund bonus if the funding threshold isn't met, thus encouraging participation by ensuring contributors benefit regardless of the project's success 1. This mechanism effectively transforms the free-rider problem into a dominant strategy for contribution, doubling the success rate of projects in experimental settings 2.
It's such a brilliant idea and useful idea because it takes the equilibrium from being, towards being a free rider to actively contributing to the public good.
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While not a panacea for all public good issues, dominant assurance contracts significantly enhance the likelihood of successful project funding, especially for projects with clear cost-benefit analyses like infrastructure 2.
Governance Models
Exploring future governance models, highlights the potential of online platforms to revolutionize how we organize collectively. He notes that the digital age allows for unprecedented experimentation with governance mechanisms, such as those seen in blockchain projects, which could lead to more efficient and inclusive systems 3. This experimentation is crucial for addressing collective action problems without falling into dictatorial or rent-seeking pitfalls.
When before in human history have we had as many experiments with governance mechanisms as we are today? It's really quite extraordinary.
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Tabarrok also discusses Robin Hanson's concept of Futarchy, a governance system where prediction markets guide policy decisions. He sees this as a groundbreaking addition to the limited historical types of government, advocating for more trials of such innovative ideas to enhance governance efficiency 4.