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Coordinating Public Good Provision by Mediated Communication

Author

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  • Maija Halonen-Akatwijuka
  • In-Uck Park

Abstract

We examine a setup where two agents allocate a fixed budget between public goods in two areas. The agents may be biased to one area, which is their private information. Without communication, the funds are allocated inefficiently, resulting in gaps and duplication in public good provision. Direct communication between the agents is ineffective and cannot resolve the coordination failure even when the potential biases are negligible. Coordination can be improved by a mediator who filters the information communicated by the agents. Our results can throw light on how to improve coordination of humanitarian aid by an appropriately designed information management system.

Suggested Citation

  • Maija Halonen-Akatwijuka & In-Uck Park, 2021. "Coordinating Public Good Provision by Mediated Communication," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 311-342, May.
    • Handle: RePEc:aea:aejmic:v:13:y:2021:i:2:p:311-42
    DOI: 10.1257/mic.20180272
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid

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