We propose a design for philanthropic or publicly-funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from Quadratic Voting to a funding mechanism for endogenous community formation. Individuals make public goods contributions to projects of value to them. The amount received by the project is (proportional to) the square of the sum of the square roots of contributions received. Under the “standard model” this yields first best public goods provision. Variations can limit the cost, help protect against collusion and aid coordination. We discuss applications to campaign finance, open source software ecosystems, news media finance and urban public projects. More broadly, we offer a resolution to the classic liberal-communitarian debate in political philosophy by providing neutral and non-authoritarian rules that nonetheless support collective organization. https://arxiv.org/abs/1809.06421 (DeepL)
- We propose a design for philanthropic or publicly funded seeding to (nearly) optimally provide a decentralized, self-organizing ecosystem of public goods (i.e. goods or services such as parks or highways). This concept extends ideas from second round of voting to Financing Mechanisms for endogenous community building. Individuals make contributions of public goods to projects that are of value to them. The amount of money the project receives is (proportionally) the square of the sum of the square roots of the contributions received. Under the standard model, this results in the best provision of public goods. Variations can limit costs, protect against collusion, and aid coordination. Applications to campaign finance, the open source software ecosystem, news media financing, and urban public works will be discussed. More broadly, it provides a solution to the classic liberal vs. communitarian debate in political philosophy by offering neutral, non-authoritarian rules that nevertheless support collective organization.
Quadratic Funding Vitalik Buterin, Zoe Hitzig, E. Glen Weyl
The paper proposes a new mechanism for financing public goods: secondary financing (Quadratic Financing, QF). The main points are as follows
- Purely private contributions underprovide public goods, while majority voting with one-person, one-vote systems fail to reflect minority preferences.
- The QF allows each individual to contribute any amount to a public goods project, and the funds each project receives are proportional to the square of the sum of the square roots of the individual contributions.
- This mechanism allows projects with a large number of small contributors to receive more funds, resulting in a marginally optimal allocation of funds.
- Variants such as a Capital-constrained QF in the presence of funding constraints and a ±QF that allows negative contributions have also been proposed.
- He discusses potential applications in a wide range of areas, including campaign finance, open source software, news media, philanthropy, and urban planning.
- On the theoretical side, the analysis is limited to assumptions such as quasi-linear utility and independent valuation, and the possibility of strategic manipulation has not been fully explored.
- In addition to deepening economic theory, future research must be accumulated through experimentation, including the development of interfaces that are intuitive for participants and the verification of their impact on community formation.
As an innovative mechanism that overcomes the limitations of existing financing methods and aims to optimize the supply of public goods, this proposal is expected to lead to further experiments in the real world and further theoretical development.
Quadratic Finance Submitted on 17 Sep 2018
- Liberal Radicalism: A Flexible Design For Philanthropic Matching Funds and 1 day difference, mystery
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