| Abstract: | In overlapping-generations models of public-goods provision,in which the contribution decision is binary and lifetimes arefinite, the set of symmetric subgame-perfect equilibria canbe categorized into three types: seniority equilibria, in whichplayers contribute (effort) until a predetermined age and thenshirk thereafter; dependency equilibria, in which players initiallyshirk, then contribute for a set number of periods, then shirkfor the remainder of their lives; and sabbatical equilibria,in which players alternately contribute and shirk for periodsof varying length before entering a final stage of shirking.In a world without discounting we establish conditions for equilibriumand demonstrate that for any dependency equilibrium there isa seniority equilibrium that Pareto dominates it ex ante. Weproceed to characterize generational preferences over alternativeseniority equilibria. We explore the aggregation of these preferencesby embedding the public-goods provision game in a voting frameworkand solving for the majority-rule equilibria. In this way wecan think of political processes as providing one natural frameworkfor equilibrium selection in the original public-goods provisiongame. |
