Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence
AbstractWe describe an experimental comparison of the out-of-equilibrium performance of three allocation mechanisms designed to achieve Lindahl outcomes as Nash equilibria: the mechanisms due to Walker (1981), Kim (1993), and Chen (2002). We find that Chenʼs mechanism, which is supermodular, converges closest and most rapidly to its equilibrium. However, we find that the properties that move subjects toward equilibrium in Chenʼs mechanism typically generate sizeable taxes and subsidies when not in equilibrium, and correspondingly large budget surpluses and deficits, which typically far outweigh the surplus created by providing the public good. The Kim mechanism, on the other hand, converges relatively close to its equilibrium and exhibits much better out-of-equilibrium efficiency properties.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 74 (2012)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/inca/622836
Public goods; Mechanism design; Lindahl;
Find related papers by JEL classification:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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