Esteem-based contributions and optimality in public goods supply

In a paper published in this journal, Cowen (2002) argues that whenever compliance with norms is supported by the forces of esteem, there is “too little” norm compliance. In this paper, we show that Cowen’s logic is flawed – that when the operation of esteem-based norms is formally modelled, no such general a priori conclusion follows. We investigate the conditions that would be necessary to ensure that esteem incentives for public goods contributions generate optimality in public goods supply, and indicate on that basis the conditions for voluntary sub-optimal and supra-optimal public goods provision in the esteem context.