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Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation

Author

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  • Takuma Wakayama

    (Ryukoku University)

  • Takehiko Yamato

    (School of Engineering, Tokyo Institute of Technology)

Abstract

We compare the voluntary contribution mechanism with any mechanism attaining Pareto-efficient allocations when each agent can choose whether he/she participates in the mechanism for the provision of a non-excludable public good. We find that, in our participation game, the voluntary contribution mechanism, because of its higher participation probability in the unique symmetric mixed strategy Nash equilibrium, may perform better than any Pareto-efficient mechanism in terms of the equilibrium expected provision level of the public good and the equilibrium expected payoff of each agent. Our results suggest that the voluntary contribution mechanism, which cannot realize Pareto-efficient allocations under compulsory participation, might be superior to any Pareto-efficient mechanism if we allow agents to voluntarily choose participation in the mechanism.

Suggested Citation

  • Takuma Wakayama & Takehiko Yamato, 2023. "Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 517-553, June.
    • Handle: RePEc:spr:jogath:v:52:y:2023:i:2:d:10.1007_s00182-022-00828-x
    DOI: 10.1007/s00182-022-00828-x
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    More about this item

    Keywords

    Voluntary participation; Non-excludable public goods; Voluntary contribution mechanism; Pareto-efficient mechanism; Mixed strategies;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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