Strategy-proof allocation mechanisms for economies with public goods
AbstractThis paper provides a characterization of the class of incentive compatible (i.e., strategy-proof) allocation mechanisms for decision problems associated with classical economic environments. It is shown that when at least one public good is provided, then only dictatorial allocation mechanisms are incentive compatible. Dictatorial mechanisms are very unsatisfactory, as any conflict of interest is always resolved in favor of a single individual (the dictator). This result reveals a basic incompatibility between incentive compatibility and any other desirable property (e.g., any kind of efficiency, fairness, etc.) of an allocation mechanism. In particular, incentive compatible allocation mechanisms typically produce inefficient outcomes.
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- Diego Moreno & María José Moscoso, 2010. "Strategy-proof allocation mechanisms for economies with public goods," Economics Working Papers we1027, Universidad Carlos III, Departamento de Economía.
- Moreno, Diego & Moscoso, María José, . "Strategy-proof allocation mechanisms for economies with public goods," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/10260, Universidad Carlos III de Madrid.
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