A fair pivotal mechanism for nonpecuniary public goods
AbstractThe Clarke pivotal mechanism is inappropriate for nonpecuniary public goods, because the assumption of quasilinear utility is invalid, and because the mechanism gives disproportionate influence to wealthier voters. But by introducing a `stochastic' Clarke tax, we can convert any separable utility function into a quasilinear one. Also, by stratifying a large population by wealth, and applying different `weights' to the votes from different wealth-strata, we can ensure that the mechanism is `fair' in the sense that the voters in different strata all have equal influence (on average) over the outcome. These weights can be fine-tuned to their optimal values over time, by using the rich dataset generated by a series of large-population referenda. The result is a fair, strategy-proof implementation of weighted utilitarian social choice over nonpecuniary public goods.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 34525.
Date of creation: 04 Nov 2011
Date of revision:
pivotal mechanism; strategy-proof implementation; nonpecuniary public good; utilitarian; inequality;
Find related papers by JEL classification:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
- NEP-MIC-2011-11-14 (Microeconomics)
- NEP-PUB-2011-11-14 (Public Finance)
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