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Uniform Price Mechanisms for Threshold Public Goods Provision: An Experimental Investigation

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Author Info

  • Zhi Li

    (University of Connecticut)

  • Christopher Anderson

    ()
    (University of Washington)

  • Stephen K. Swallow

    ()
    (University of Connecticut)

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    Abstract

    This paper introduces two new mechanisms for provision point public goods, motivated by the design of uniform price auctions: the uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. UPA and UPC are compared with the provision point mechanism (PPM) and the proportional rebate mechanism (PR). We use undominated perfect equilibrium and the marginal penalty associated with overcontribution to provide benchmark predictions for an experimental comparison with heterogeneous induced values, and with different provision point treatments. We find UPA generates by far the highest group and individual contributions at all provision points and values, but has the lowest provision rate; UPC elicits higher aggregate contributions than PPM and PR, and has the highest provision rate, driven by higher contributions from high-value individuals, especially at moderate provision points. This is consistent with subjects offering more in mechanisms with lower expected marginal penalty, but the effect is most significant when marginal contributions are more likely to affect provision.

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    File URL: http://www.zwickcenter.uconn.edu/documents/workingpaper14.pdf
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    Bibliographic Info

    Paper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Working Papers with number 14.

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    Length: 48 pages
    Date of creation: Nov 2012
    Date of revision:
    Handle: RePEc:zwi:wpaper:14

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    Related research

    Keywords: Uniform price auction; Uniform price cap; Proportional rebate; No rebate;

    References

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    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.:
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    1. ALBOTH, Dirk & LERNER, Anat & SHALEV, Jonathan, 1998. "Profit maximizing in auctions of public goods," CORE Discussion Papers 1998017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Rondeau, Daniel & Poe, Gregory L. & Schulze, William D., 2005. "VCM or PPM? A comparison of the performance of two voluntary public goods mechanisms," Journal of Public Economics, Elsevier, vol. 89(8), pages 1581-1592, August.
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