Strategic bias and demand for public goods. Theory and an application to the arts

This paper provides new evidence on bias in preference revelation and valuation of public goods. It does so through the systematic definition of free-rider, mixed-good, information and social choice problems and by a survey application to the case of valuing social benefit from the arts. These sources of bias are each found to be significant. It is also found that free-rider behaviour is random with respect to observable socio-demographic characteristics. Allowing for bias, aggregate public good benefit necessary for public support of arts is still established. The study therefore demonstrates not only the significance of free-rider and other biases in eliciting public good demand, but also practicable techniques for allowing for these effects via a survey method.