We say that individuals get a "warm glow" from giving to a public good if they not only get utility from the public good but also from giving itself.Explain the following: "While warm glow lessens the free rider problem, it cannot eliminate it."

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Quizplus · Accepted Answer

The Answer is The private benefits one gets from giving keep us giving even when the number of individuals increases and the free rider problem gets large. However, the free rider problem is still there -- to the extent to which we value the public good, we give too little relative to the efficient level. Only if the only utility we get is from the warm glow does the free rider problem disappear -- but that's because the public goods problem has then disappeared.

We Say That Individuals Get a "Warm Glow" from Giving