Coordination in Public Good Provision: How Individual Volunteering is Impacted by the Volunteering of Others
Diasakos, Theodoros M
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In this analysis, we examine the relationship between an individual's decision to volunteer and the average level of volunteering in the community where the individual resides. Our theoretical model is based on a coordination game , in which volunteering by others is informative regarding the benefit from volunteering. We demonstrate that the interaction between this information and one's private information makes it more likely that he or she will volunteer, given a higher level of contributions by his or her peers. We complement this theoretical work with an empirical analysis using Census 2000 Summary File 3 and Current Population Survey (CPS) 2004-2007 September supplement file data. We control for various individual and community characteristics, and employ robustness checks to verify the results of the baseline analysis. We additionally use an innovative instrumental variables strategy to account for reflection bias and endogeneity caused by selective sorting by individuals into neighborhoods, which allows us to argue for a causal interpretation. The empirical results in the baseline, as well as all robustness analyses, verify the main result of our theoretical model, and we employ a more general structure to further strengthen our results.