a1 Economics, University of East Anglia
For most of the problems that economists consider, the assumption that agents are self-interested works well enough, generating predictions that are broadly consistent with observation. In some significant cases, however, we find economic behavior that seems to be inconsistent with self-interest. In particular, we find that some public goods and some charitable ventures are financed by the independent voluntary contributions of many thousands of individuals. In Britain, for example, the lifeboat service is entirely financed by voluntary contributions. In all rich countries, charitable appeals raise large amounts of money for famine relief in the Third World. The willingness of individuals to contribute to such projects is an economic fact that requires an explanation.
* This essay was written as part of the Foundations of Rational Choice Theory project, supported by the Economic and Social Research Council (award R 000 23 2269). The ideas contained in it developed out of discussions with Robin Cubitt, Judith Mehta, Martin Hollis, and Chris Starmer. It was improved as a result of comments from the other contributors to this volume.