Governments may overspend on public goods due to commitment issues
This research examines how governments can provide public goods effectively when they can't promise to stick to their plans. The study shows that when taxpayers' skills are known, the usual rules for deciding how much to spend on public goods need to be adjusted. Even if people all like the same things, the usual rules don't work when governments can't commit. This can lead to spending too much on public goods compared to when governments can make promises. The findings suggest that when governments can't commit, decisions on how much to invest in public goods might end up being more than needed.