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The Minimum Approval Mechanism Implements the Efficient Public Good Allocation Theoretically and Experimentally

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  • Takehito Masuda
  • Yoshitaka Okano
  • Tatsuyoshi Saijo

Abstract

We propose the minimum approval mechanism (MAM) for a standard linear public good environment with two players. Players simultaneously and privately choose their contributions to the public good in the first stage. In the second stage, they simultaneously decide whether to approve the other's choice. Both contribute what they choose in the first stage if both players approve; otherwise, both contribute the minimum of the two choices in the first stage. The MAM multiply implements the Pareto-efficient allocation in backward elimination of weakly dominated strategies (BEWDS), limit logit agent quantal response equilibrium, subgame perfect minimax regret equilibrium, level-k thinking, and diagonalization heuristics. Moreover, the MAM is unique under plausible conditions. Overall, contributions in the MAM experiment averaged 94.9%. Quantifying subjects' responses to the questionnaire revealed the heterogeneity of reasoning processes to be consistent with the model.

Suggested Citation

  • Takehito Masuda & Yoshitaka Okano & Tatsuyoshi Saijo, 2013. "The Minimum Approval Mechanism Implements the Efficient Public Good Allocation Theoretically and Experimentally," ISER Discussion Paper 08874r, Institute of Social and Economic Research, Osaka University, revised Sep 2013.
  • Handle: RePEc:dpr:wpaper:08874r
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Koffi Serge William Yao, 2021. "An Experiment on Cooperation in a CPR Game with a Disapproval Option," Post-Print hal-03418905, HAL.
    2. 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.
    3. Philippe Aghion & Ernst Fehr & Richard Holden & Tom Wilkening, 2018. "The Role of Bounded Rationality and Imperfect Information in Subgame Perfect Implementation—An Empirical Investigation," Journal of the European Economic Association, European Economic Association, vol. 16(1), pages 232-274.
    4. Makoto Hagiwara & Fumihiro Yonekura, 2020. "Implementation in Iterative Elimination of Obviously Dominated Strategies: An Experiment on King Solomon's Dilemma," Discussion Paper Series DP2020-17, Research Institute for Economics & Business Administration, Kobe University.
    5. Masuda, Takehito & Okano, Yoshitaka & Saijo, Tatsuyoshi, 2014. "The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally," Games and Economic Behavior, Elsevier, vol. 83(C), pages 73-85.
    6. Cason, Timothy N. & Zubrickas, Robertas, 2017. "Enhancing fundraising with refund bonuses," Games and Economic Behavior, Elsevier, vol. 101(C), pages 218-233.
    7. Tatsuyoshi Saijo, 2019. "Second thoughts of social dilemma in mechanism design," Working Papers SDES-2019-6, Kochi University of Technology, School of Economics and Management, revised Jun 2019.
    8. 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.
    9. Koffi Serge William Yao & Emmanuelle Lavaine & Marc Willinger, 2022. "Does the approval mechanism induce the efficient extraction in common pool resource games?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(1), pages 111-139, January.
    10. Tatsuyoshi Saijo & Takehito Masuda & Takafumi Yamakawa, 2018. "Approval mechanism to solve prisoner’s dilemma: comparison with Varian’s compensation mechanism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(1), pages 65-77, June.
    11. Elbittar, Alexander & Di Giannatale, Sonia, 2017. "“Neither I nor you shall have him”: An experimental study of the King Solomon's Dilemma," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 70(C), pages 55-69.
    12. Alexander L. Brown & Rodrigo A. Velez, 2019. "Empirical bias and efficiency of alpha-auctions: experimental evidence," Papers 1905.03876, arXiv.org, revised Jul 2020.
    13. Koffi Serge William Yao, 2021. "An Experiment on Cooperation in a CPR Game with a Disapproval Option," Games, MDPI, vol. 12(4), pages 1-14, October.
    14. Koffi Serge William Yao & Emmanuelle Lavaine & Marc Willinger, 2021. "Effectiveness of the approval mechanism for CPR dilemmas: unanimity versus majority rule," CEE-M Working Papers hal-03234786, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    15. Dong, Lu & Falvey, Rod & Luckraz, Shravan, 2019. "Fair share and social efficiency: A mechanism in which peers decide on the payoff division," Games and Economic Behavior, Elsevier, vol. 115(C), pages 209-224.
    16. Ernst Fehr & Michael Powell & Tom Wilkening, 2014. "Handing Out Guns at a Knife Fight: Behavioral Limitations of Subgame-Perfect Implementation," CESifo Working Paper Series 4948, CESifo.
    17. Daniele Nosenzo & Fabio Tufano, 2015. "Entry or Exit? The Effect of Voluntary Participation on Cooperation," Discussion Papers 2015-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    18. Cason, Timothy N. & Zubrickas, Robertas, 2019. "Donation-based crowdfunding with refund bonuses," European Economic Review, Elsevier, vol. 119(C), pages 452-471.
    19. Ernst Fehr & Michael Powell & Tom Wilkening, 2021. "Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms," American Economic Review, American Economic Association, vol. 111(4), pages 1055-1091, April.
    20. repec:dpr:wpaper:0874r is not listed on IDEAS
    21. Ernst Fehr & Michael Powell & Tom Wilkening, 2021. "Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms," American Economic Review, American Economic Association, vol. 111(4), pages 1055-1091, April.
    22. Tatsuyoshi Saijo & Takehito Masuda & Takafumi Yamakawa, "undated". "Approval Mechanism to Solve Prisoner’s Dilemma: Comparison with Varian’s Compensation Mechanism," Working Papers SDES-2016-15, Kochi University of Technology, School of Economics and Management.
    23. Tatsuyoshi Saijo & Yoshitaka Okano, 2014. "Second thoughts," Working Papers SDES-2014-6, Kochi University of Technology, School of Economics and Management, revised Apr 2015.
    24. Xiaochuan Huang & Takehito Masuda & Yoshitaka Okano & Tatsuyoshi Saijo, 2014. "Cooperation among behaviorally heterogeneous players in social dilemma with stay or leave decisions," Working Papers SDES-2014-7, Kochi University of Technology, School of Economics and Management, revised Feb 2015.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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