A Mechanism for Allocating the Expenses of Public Goods: Analyses of a Swedish Government Project
AbstractBohm (1982) reported a Swedish census project, which used a cost-sharing mechanism giving participants incentives to misrepresent their willingness to pay (WTP), yet still ended up providing a public good. In this paper we offer a theoretical analysis of the mechanism and propose two revisions. In the first revision, the incentives to overstate or understate are randomized, weakening participantsâ€™ tendency to misrepresent WTP. Whereas in the second revision, reporting true WTP is participantsâ€™ weakly dominant strategy. Our revisions delineate a simple approach to induce true WTP, while the Swedish mechanism can be treated as a special case.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt3mx5z1b4.
Date of creation: 01 Aug 1997
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Nash Equilibrium; Public Good; Willingness to Pay.;
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- Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
- Tideman, T Nicolaus & Tullock, Gordon, 1976. "A New and Superior Process for Making Social Choices," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1145-59, December.
- Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
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