Positional effects in public good provision. Strategic interaction and inertia

Consumption satisfaction depends on other factors apart from the inherent characteristic ofcommodities. Among them, positional concerns are central in behavioral economics. Individualsenjoy returns from the ranking occupied by the consumed item. In public good, agents obtainsatisfaction from their relative contribution. We analyze how positional preferences for voluntarycontribution to a public good favor players' contributions and could lead to social welfareimprovements. A two-player public good game is analyzed, first a one-shot game and later asimple dynamic game with inertia. Homogeneous and non-homogeneous individuals areconsidered and particular attention is given to the transition path.