The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally |
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Institution: | 1. Aix-Marseille University, Aix-Marseille School of Economics, CNRS, EHESS, France;2. Department of Economics, McGill University, Montreal H3A 2T7, Canada;3. Cef.up, Economics Department, University of Porto, Portugal |
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Abstract: | We propose the minimum approval mechanism (MAM) for a standard linear public good environment with two players. Players simultaneously and privately choose their contributions to the public good in the first stage. In the second stage, they simultaneously decide whether to approve the other?s choice. Both contribute what they choose in the first stage if both players approve; otherwise, both contribute the minimum of the two choices in the first stage. The MAM implements the Pareto-efficient allocation in multiple solution concepts including backward elimination of weakly dominated strategies (BEWDS), limit logit agent quantal response equilibrium, subgame perfect minimax regret equilibrium, level-k thinking, and diagonalization heuristics. Moreover, the MAM is unique under plausible conditions. Overall, contributions in the MAM experiment averaged 94.9%. Quantifying subjects? responses to the questionnaire reveal heterogeneous reasoning processes and highlight the importance of developing mechanisms that implement the desired social choice outcome in multiple solution concepts. |
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Keywords: | Public good experiment Approval mechanism Multiple implementation MAM"} {"#name":"keyword" "$":{"id":"kw0100"} "$$":[{"#name":"text" "_":"minimum approval mechanism BEWDS"} {"#name":"keyword" "$":{"id":"kw0120"} "$$":[{"#name":"text" "_":"backward elimination of weakly dominated strategies MCM"} {"#name":"keyword" "$":{"id":"kw0140"} "$$":[{"#name":"text" "_":"mate choice mechanism |
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