Optimal policy rules - including those regarding income taxation, commodity taxation, public goods, and externalities - are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and...

A framework is proposed to subsume public goods and common-pool resources, respectively, as specific cases of positive and negative externalities. A pure public good is a positive externality whose appropriable benefits are too small or too uncertain relative to the high private cost for anyone...

We investigate whether public provision of positional goods can be a sensible instrument to address inefficiencies arising from relative-standing externalities associated with the excessive consumption of such goods. In situations where consumers face a discrete choice between a private and a...

When agents face coordination problems their choices often impose externalities on third parties. We investigate whether such externalities can affect equilibrium selection in a series of one-shot coordination games varying the size and the sign of the externality. We find that third-party...

This study explores mechanism design for networks of interpersonal relationships. Agents' social (i.e., altruistic or spiteful) preferences and private payoffs are all subject to asymmetric information; utility is (quasi-)linear, types are independent. I show that any network of at least three...

Social preferences facilitate the internalization of health externalities, for example by reducing mobility during a pandemic. We test this hypothesis using mobility data from 258 cities worldwide alongside experimentally validated measures of social preferences. Controlling for time-varying...

Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others....

Standard economic theory assumes that consumers ignore the externalities they create, such as emissions from burning fossil fuels and generating waste. In an incentivized study (N = 3, 718), we find that most people forgo substantial gains to avoid imposing negative externalities on others....