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Learning Dynamics in Mechanism Design: An Experimental Comparison of Public Goods Mechanisms

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  • Healy, Paul J.

Abstract

In a repeated-interaction public goods economy, dynamic behavior may affect the efficiency of various mechanisms thought to be efficient in one-shot games. Inspired by results obtained in previous experiments, the current paper proposes a simple best response model in which players' beliefs are functions of previous strategy profiles. The predictions of the model are found to be highly consistent with new experimental data from five mechanisms with various types of equilibria. Interesting properties of a 2-parameter Vickrey-Clarke-Groves mechanism help to draw out this results. The simplicity of the model makes it useful in predicting dynamic stability of other mechanisms.

Suggested Citation

  • Healy, Paul J., 2003. "Learning Dynamics in Mechanism Design: An Experimental Comparison of Public Goods Mechanisms," Working Papers 1182, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Handle: RePEc:clt:sswopa:1182
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    Keywords

    mechanism design; experiments; best response; public goods; dynamics;
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