Friday, August 16, 2013

Club Goods, Networks, and Moral Obligation

Suppose you're not just popular because you're fun at parties or, like Mungo and me, look good in a string bikini. Suppose you're a well-connected celebrity academic, like Mungo, but not like me. Maybe you've got an extremely pleasant, tenured position at an institution you treasure in a part of the world that fits you just perfectly. Maybe it would take an Act of God to dislodge you from your big overstuffed comfy chair in your tastefully-appointed, yet delightfully cluttered office. Maybe you have no narrow, self-interested reason to obtain or maintain an account with a service like LinkedIn.

Should you do it anyway? Sure, you might not gain from it, but if you teach at an elite, or even just a middle-of-the-road graduate-degree-granting institution, your students, both current and former can use you as a particularly valuable node. If you even casually keep up with alumni, you have a much better idea of where to point students on the cusp of graduation. Moreover, you have a really good idea of who the best talent in the current crop of graduates is, much more so than can fit on a CV or can be easily communicated in a ten minute interview in a conference hotel room.

You're a club good. Your account is more than just merely euvoluntary. You generate a positive externality.

But the marginal cost to you of joining this probably exceeds the private marginal benefit. Ordinary relative price economics and Coase suggests that you should join and then be compensated by the beneficiaries. Of course, there's a bit of a dispersion problem that seems like it might wander a bit out of Ostrom territory. For most of the private common pool resource allocation solutions studied by Elinor and Vince Ostrom, there were good social ties that kept people from shirking. If you think it's worth it to subsidize Paul Krugman and Tyler Cowen's LinkedIn accounts, how would you design the subsidy? Who should bear the cost and how should it be administered?

If you give a good enough answer, I'll advertise it and who knows, you might get featured on MR.

1 comment:

  1. Compensation in the scenario described raises an interesting question for me. Isn't some of the perceived value based on perceived altruism? So suppose you did charge students to link to you on LinkedIn (I'm not a user so forgive my terminology). Would that link be less useful to them if the employers looking at it knew such a link could be purchased? You would of course protest that you're only linking students that took your course and/or seriously impressed you academically, but there's no reason to believe your claim.

    So if we take the worst case, where maintaining the account has a positive externality, but monetizing it immediately negates that value completely (possibly turns it negative, as perhaps being linked to your account now seems tacky or sleazy) what does the right course of action become?


Do you have suggestions on where we could find more examples of this phenomenon?