How insurance affects altruistic provision in threshold public goods games

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Abstract

The occurrence and maintenance of cooperative behaviors in public goods systems have attracted great research attention across multiple disciplines. A threshold public goods game requires a minimum amount of contributions to be collected from a group of individuals for provision to occur. Here we extend the common binary-strategy combination of cooperation and defection by adding a third strategy, called insured cooperation, which corresponds to buying an insurance covering the potential loss resulted from the unsuccessful public goods game. Particularly, only the contributing agents can opt to be insured, which is an effort decreasing the amount of the potential loss occurring. Theoretical computations suggest that when agents face the potential aggregate risk in threshold public goods games, more contributions occur with increasing compensation from insurance. Moreover, permitting the adoption of insurance significantly enhances individual contributions and facilitates provision, especially when the required threshold is high. This work also relates the strategy competition outcomes to different allocation rules once the resulted contributions exceed the threshold point in populations nested within a dilemma.

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