Threshold Public Good, explained.
A threshold public good provides its shared benefit only when contributions reach a minimum level, making success depend on coordination as well as generosity.
Why it happens
A contribution can be decisive near the threshold and ineffective far below it. The consequences of failed funding also matter: refund rules and unrecoverable contributions create different incentives.
When a project has a threshold, a small contribution can be pivotal. Institutions can change who expects others to contribute and how commitments are enforced.
Read the result
Compare expected total contributions with the funding threshold. Watch whether your contribution is pivotal, and read the model's failure rule before assuming that money is automatically refunded.
A worked example
A shared project needs ten units
Other contributors have committed eight units and you can add two.
Your contribution crosses the threshold, while adding one leaves the project below its stated requirement.
The same two units can have different value when others have contributed only three or have already contributed ten.
OPTIONAL DEEPER DETAILGo deeper: inside the model
Inside this model
Three other people each independently contribute 10 with the chosen probability. The project pays every person 40 if total pledges reach the target. Your pledge costs you its amount whether or not funding succeeds. The chart enumerates all eight possible patterns of other contributors to compute your expected net payoff for each pledge.
Where this idea is useful
A practical use
A neighborhood improvement may be funded only after enough households make credible pledges.
A common misconception
“Every contribution has the same effect.”
Near a threshold, a small contribution can determine success. Its effect depends on what others have already committed.
What this explanation leaves out
- Independent decisions, fixed 10-unit pledges, identical 40-unit benefits, and sunk pledges are model rules. Real projects may refund failed pledges and coordinate through discussion.
How does this differ from a linear public goods game?
In a linear game, each extra contribution adds benefit gradually. A threshold game includes a discontinuity: a shared benefit appears only after enough resources are committed.
Is your contribution adding a little value or deciding whether the project exists at all?
Associated thinkers
Further reading
Explore the original research or the teaching reference behind this experiment.