Abstract: We examine how successful collective action among heterogeneous actors may be achieved. Using a simulation-based approach, we explore the effect of three parameters—cooperativeness, heterogeneity of benefits, and heterogeneity of capabilities—on the extent to which actors in a population contribute towards a collective good in the long run. Our results show that cooperativeness is neither necessary nor sufficient for collective action; where actors are heterogeneous, collective action may fail even with full cooperativeness. We then offer two solutions to this problem: a meritocratic solution that relies on motivating high capability rational egoists to contribute more to the common good by aligning their benefits with their capabilities; and a locally transparent solution that relies on motivating high capability conditional cooperators to contribute more to the common good by making them aware of others’ constraints. We show that together these approaches can help sustain moderate to high levels of collective action even in highly heterogeneous populations.

Abstract: The growing interest in private solutions like CSR initiatives, non-profits, and public-private partnerships for addressing social issues such as poverty alleviation, disease eradication, or education provision poses a critical question: Are these solutions Pareto improving, or do they benefit recipients while disadvantaging non-recipients? This concern is particularly pertinent when private providers compete with public actors, potentially reducing the latter’s effectiveness. In this paper, I examine how private solutions to social issues might negatively impact existing public providers. First, the entry of private providers could diminish support for public providers, leading to fewer resources. Second, private providers, often profit-motivated, might serve more economically viable segments, leaving less viable ones to public providers, thereby increasing the latter’s production costs. I explore these mechanisms in the context of US public education, where charter schools (private providers) coexist with traditional public schools (public providers). I find that the entry of charter schools reduces local support for traditional public schools (TPS), evident in decreased per pupil local revenues and fewer successful school referenda for additional funding. Furthermore, using a quasi-natural experiment, I demonstrate that traditional public school grades exposed to charter schools see an increase in the proportion of economically disadvantaged and disabled students. Additionally, I find these effects are more pronounced following the entry of for-profit private providers than non-profits, providing evidence on the comparative efficiency of the non-profit organizational form in addressing social issues where a service must be provided indiscriminately.

Abstract: Can communities be both inclusive and high performing? In this study we argue that there is a potential tension between community inclusion and community performance because increasing diversity will lower the density of homophilous social ties within a community, weakening social cohesion and perceptions of shared interest, and making it harder for the community to organize and engage in collective action. However, these effects may be ameliorated in the presence of bridging ties, i.e., in communities where members of different groups interact with each other on a regular basis. We test these arguments in the context of local spending on US public schools, showing that increasing racial diversity in a school district tends to lower support for funding of local schools. This relationship only holds for districts where local schools are relatively segregated, however; where children of different races tend to attend school together we see no significant impact of increasing diversity on local school funding. Supplementary analyses shows that these effects are stronger in low income districts and in districts with lower educational levels, consistent with the trade-off between inclusion and collective action being stronger in the presence of resource constraints and the absence of shared values. We also show that lower local spending is associated with weaker educational outcomes in public schools. Our study thus sheds new light on the drivers of community performance, while also addressing a key societal grand challenge: equitable access to quality education for all children.

Abstract: Despite the growing interest in the big data revolution and the associated data protection concerns of consumers and policy makers, our knowledge has remained limited regarding the strategic and economic implications of data protection, including data privacy and data security. In this study, we quantify firms’ attention to data protection and their data protection practices and show that firms’ data protection responds to changes in regulatory and competitive pressures with substantial financial implications. U.S. firms increased data protection after exposure to more stringent regulations worldwide, including the European GDPR, as well as after data breaches in their industry. For most firms, the enhanced data protection contributed to reduced market valuation measured by Tobin’s Q. These findings suggest that, although firms under regulatory and competitive pressures for data protection expend significant additional resources, such investments do not allow them to differentiate themselves in the market, at least in the short run. However, firms with significant data capabilities (measured as patents related to data processing, data security, and storage) as well as those with greater market shares were able to mitigate the adverse effects. We discuss the broader managerial and policy implications of these findings as well as potential avenues for future research.