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Dynamic Stability of Nash-Efficient Public Goods Mechanisms: Reconciling Theory and Experiments

In: Experimental Business Research

Author

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  • Yan Chen

    (University of Michigan)

Abstract

We propose to use supermodularity as a robust dynamic stability criterion for public goods mechanisms with a unique Nash equilibrium. Among existing public goods mechanisms whose Nash equilibria are Pareto efficient, the Groves-Ledyard mechanism is a supermodular game if and only if the punishment parameter is sufficiently high, while none of the Hurwicz, Walker and Kim mechanisms is supermodular in a quasilinear environment. The Falkinger mechanism is a supermodular game in a quadratic environment if and only if the subsidy coefficient is greater than or equal to one. These results are consistent with the findings in seven experimental studies.

Suggested Citation

  • Yan Chen, 2005. "Dynamic Stability of Nash-Efficient Public Goods Mechanisms: Reconciling Theory and Experiments," Springer Books, in: Amnon Rapoport & Rami Zwick (ed.), Experimental Business Research, chapter 0, pages 185-200, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-24243-9_10
    DOI: 10.1007/0-387-24243-0_10
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    Citations

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    Cited by:

    1. Tatsuyoshi Saijo & Yoshitaka Okano & Takafumi Yamakawa, 2015. "The approval mechanism solves the prisoner's dilemma theoretically and experimentally," Working Papers SDES-2015-12, Kochi University of Technology, School of Economics and Management, revised Feb 2015.
    2. Cason, Timothy N. & Saijo, Tatsuyoshi & Sjostrom, Tomas & Yamato, Takehiko, 2006. "Secure implementation experiments: Do strategy-proof mechanisms really work?," Games and Economic Behavior, Elsevier, vol. 57(2), pages 206-235, November.
    3. Bracht, Juergen & Figuieres, Charles & Ratto, Marisa, 2008. "Relative performance of two simple incentive mechanisms in a public goods experiment," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 54-90, February.
    4. Saijo, Tatsuyoshi & Shen, Junyi, 2018. "Mate choice mechanism for solving a quasi-dilemma," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 1-8.
    5. Sébastien ROUILLON, 2009. "A new mechanism to implement the Lindahl equilibriums (In French)," Cahiers du GREThA (2007-2019) 2009-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    6. Meng, Dawen & Tian, Guoqiang, 2013. "Entry-Deterring Nonlinear Pricing with Bounded Rationality," MPRA Paper 57935, University Library of Munich, Germany, revised May 2014.

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