Ranking alternatives by a fair bidding rule: a theoretical and experimental analysis
AbstractWe introduce a procedurally fair rule to study a situation where people disagree about the value of three alternatives in the way captured by the voting paradox. The rule allows people to select a final collective ranking by submitting a bid vector with six components (the six possible rankings of the three alternatives). In a laboratory experiment we test the robustness of the rule to the introduction of subsidies and taxes. We have two main results. First, in all treatments, the most frequently chosen ranking is the socially efficient one. Second, subsidies slightly enhance overbidding. Furthermore, an analysis of individual bid vectors reveals interesting behavioral regularities.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2012-005.
Date of creation: 20 Feb 2012
Date of revision:
Bidding behavior; Procedural fairness; Voting paradox;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-27 (All new papers)
- NEP-CBE-2012-02-27 (Cognitive & Behavioural Economics)
- NEP-EXP-2012-02-27 (Experimental Economics)
- NEP-GTH-2012-02-27 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marcelo Tyszler & Arthur Schram, 2011. "Information and Strategic Voting," Tinbergen Institute Discussion Papers 11-025/1, Tinbergen Institute.
- Werner Güth & Hartmut Kliemt, 2011. "Procedurally Fair Provision of Public Projects An axiomatic characterization," Jena Economic Research Papers 2011-016, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
- Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2012. "Public projects benefiting some and harming others: three experimental studies," Jena Economic Research Papers 2012-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2013. "Providing negative cost public projects under a fair mechanism: An experimental analysis," Jena Economic Research Papers 2013-021, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Werner Güth, 2013. "Endogenous Community Formation and Collective Provision - A Procedurally Fair Mechanism," Jena Economic Research Papers 2013-013, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Werner Güth & Hartmut Kliemt & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2013. "Procedurally fair collective provision: its requirements and experimental functionality," Jena Economic Research Papers 2013-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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