Public projects benefiting some and harming others: three experimental studies
AbstractBased on an axiomatically derived provision rule allowing community members to endogenously determine which, if any, public project should be provided, we perform experiments where (i) not all parties benefit from provision, and (ii) the projects' "costs" can be negative. In the tradition of legal mechanism design, the proposed provision rule is widely applicable. Additionally, it relies on intuitive fairness and profitability requirements. Our results indicate that the provision rule is conducive to efficiency, despite its multiplicity of equilibria and un- derbidding incentives. The only condition is that the cost of the most efficient project is positive.
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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 2012-034.
Date of creation: 02 Jul 2012
Date of revision:
Public project; Bidding behavior; Procedural fairness;
Find related papers by 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
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-08 (All new papers)
- NEP-CBE-2012-07-08 (Cognitive & Behavioural Economics)
- NEP-EXP-2012-07-08 (Experimental Economics)
- NEP-GTH-2012-07-08 (Game Theory)
- NEP-PBE-2012-07-08 (Public Economics)
- NEP-PPM-2012-07-08 (Project, Program & Portfolio Management)
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