Large-scale Public Project

This paper examines dynamic voluntary contributions to a large-scale project. In equilibrium, contributions are influenced by the interplay of two opposing incentives. While agents prefer to free ride on others for contributions, they also prefer to encourage others to contribute by increasing their own. Main findings of the paper are that (1) agents increase their contributions as the project moves forward; (2) as additional agents join the group, existing agents increase their contributions in the initial stages of the project while reducing them in the stages close to completion; (3) groups that are formed by more patient agents and that undertake larger projects tend to be larger; and (4) groups that rely on voluntary contributions tend to be too small compared to the social optimum. The empirical evidence on contributions to open-source software projects provides partial support for these findings.