Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 06-7: Intrinsic Motivation versus Signaling in Open Source Software Development

Jürgen Bitzer , Wolfram Schrettl and Philipp J.H. Schröder ()
Additional contact information
Jürgen Bitzer: Free University Berlin
Wolfram Schrettl: Free University Berlin
Philipp J.H. Schröder: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark

Abstract: This papers sheds light on the puzzling fact that even though open source software (OSS) is a public good, it is developed for free by highly qualified, young, motivated individuals, and evolves at a rapid pace. We show that when OSS development is understood as the private provision of a public good, these features emerge quite naturally. We adapt a dynamic private-provision-of-public-goods model to reflect key aspects of the OSS phenomenon. Apart from extrinsic motives (namely signaling), the present model also contains intrinsic motives of OSS programmers, such as play value or homo ludens payoff, userprogrammers’ and gift culture benefits. Such intrinsic motives feature extensively in the wider OSS literature and contribute new insights to the economic analysis

Keywords: open source software; public goods; homo ludens; war of attrition

JEL-codes: H41; L31; L86

27 pages, September 1, 2006

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