The reasons that make open-source a viable choice technically, psychologically and economically were already given in Eric Raymond’s excellent “The Cathedral and the Bazaar” series. In the first part, “The Cathedral and the Bazaar”, Raymond describes the dynamics of a small “Bazaar-style” open-source project, and analyses why this system works so well for developing software.

In the second part, Homesteading the Noosphere Raymond analyses the customs of the open source community. He demonstrates that because of the abundance of computer resources such as computing power, network bandwidth, hard-disk capacity - there is no scarsity economics involved in the Internet world. Instead, there is a gift culture, in which people are esteemed according to what they give away (namely, contributions to open source software)

The third part, “The Magic Cauldron” analyses the economics of the open-source world. It demonstrates why non-free commercial software is problematic and why open-source works so well. It gives several cases in which companies and individuals can utilise distributing software applications under open-source licences for their own commercial gains. He also dispels the myth that programmers will be out of job because of free software by noting that the majority of code in the world (and what the vast majority of programmers are working on) is code for internal use: in-house applications, customizations of programs, embedded software, software that accompanies hardware, software that powers web-sites, etc. Such software has no sale value, and so its developers will not be damaged if open source takes over.

The whole series is a very recommended read.

Joel Spolsky later continued the Magic Cauldron theme in his essay Strategy Letter V. He took the Micro-economics principle of complementary products, and showed why supporting open-source software can be a wise decision to make complementary products in greater demand. A complementary product is one that when it is in greater abundance, demand for its complement will become higher. For example, if flights to Florida became cheaper, then there would be greater demand for Florida Hotel Rooms. Open source software can be a complementary product to hardware or services involved in supporting it, which explains why companies like IBM or Sun are financing it.

Aside from all that, working on open-source software is a fun and rewarding experience. One becomes more experienced and learn a lot, interacts with users and co-developers (some of them living thousands of kilometers from where you are), and generally becomes happy of having done something useful.

Generally, the amount of work an open source developer invests in his software is vastly neglible compared to the benefit he makes out of the work of all the other developers. As someone once noted, in the open-source model everyone contributes a brick and in return everyone gets a full house for himself. By decentralizing effort, and splitting the development into a large number of well-defined projects, the open source world ensures that development is done at a highly accelerated pace.