Private Valuation of a Public Good in Three Auction Mechanisms
AbstractWe evaluate the impact of three auction mechanisms – the Becker–DeGroot–Marschak (BDM) mechanism, the second-price auction (SPA), and the random nth-price auction (NPA) – in the measurement of private willingness-to-pay and willingness-to-accept for a pure public good. Our results show that the endowment effect is lower with the BDM mechanism. In this market mechanism, the effect disappears after a few repetitions. Yet, on a logarithmic scale, the random nth-price auction yields the highest speed of convergence towards equality of welfare indices. We also observe that subjects value public goods in reference to their private subjective benefit derived from their public good funding.
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Bibliographic InfoPaper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/6445.
Date of creation: 2011
Date of revision:
Publication status: Published in Journal of Cost-Benefit Analysis, 2011, Vol. 2, no. 2
auction mechanisms; WTP-WTA disparity; private provisions; public goods;
Find related papers by JEL classification:
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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