IDEAS home Printed from https://ideas.repec.org/a/bla/jpbect/v6y2004i2p311-335.html
   My bibliography  Save this article

Equilibrium Selection and Stability for the Groves Ledyard Mechanism

Author

Listed:
  • Scott E. Page
  • Troy Tassier

Abstract

In their seminal paper Groves and Ledyard (1976) construct a balanced incentive compatible mechanism that solves the free rider problem. In subsequent research, Bergstrom, Simon, and Titus (1983) prove that there exist numerous asymmetric equilibria in addition to the symmetric equilibrium. In the present paper, we explicitly solve for the additional equilibria and use computational experiments to examine the structure and stability of the set of equilibria of the Groves Ledyard Mechanism. We find that all of the equilibria found by Berstrom, Simon, and Titus are unstable and that for a high level of the punishment parameter these equilibria do not exist. Further, we find that there exists an additional boundary equilibrium for each of the equilibria found by Bergstrom, Simon, and Titus. The boundary equilibria are all stable.

Suggested Citation

  • Scott E. Page & Troy Tassier, 2004. "Equilibrium Selection and Stability for the Groves Ledyard Mechanism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(2), pages 311-335, May.
    • Handle: RePEc:bla:jpbect:v:6:y:2004:i:2:p:311-335
    DOI: 10.1111/j.1467-9779.2004.00168.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9779.2004.00168.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9779.2004.00168.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
    2. Bergstrom, Theodore & Simon, Carl P. & Titus, Charles J., 1983. "Counting Groves-Ledyard equilibria via degree theory," Journal of Mathematical Economics, Elsevier, vol. 12(2), pages 167-184, October.
    3. Yan Chen & Fang-Fang Tang, 1998. "Learning and Incentive-Compatible Mechanisms for Public Goods Provision: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 633-662, June.
    4. Van Huyck, John B & Cook, Joseph P & Battalio, Raymond C, 1994. "Selection Dynamics, Asymptotic Stability, and Adaptive Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 975-1005, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Healy, Paul J. & Jain, Ritesh, 2017. "Generalized Groves–Ledyard mechanisms," Games and Economic Behavior, Elsevier, vol. 101(C), pages 204-217.
    2. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    3. Page, Scott E. & Tassier, Troy, 2010. "A characterization of equilibria in the Groves-Ledyard mechanism," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1229-1242, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Page, Scott E. & Tassier, Troy, 2010. "A characterization of equilibria in the Groves-Ledyard mechanism," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1229-1242, November.
    2. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    3. Cabrales, Antonio & Serrano, Roberto, 2011. "Implementation in adaptive better-response dynamics: Towards a general theory of bounded rationality in mechanisms," Games and Economic Behavior, Elsevier, vol. 73(2), pages 360-374.
    4. repec:dpr:wpaper:0874r is not listed on IDEAS
    5. Antonio Cabrales & Giovanni Ponti, 2000. "Implementation, Elimination of Weakly Dominated Strategies and Evolutionary Dynamics," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 247-282, April.
    6. Cabrales, Antonio & Charness, Gary & Corchon, Luis C., 2003. "An experiment on Nash implementation," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 161-193, June.
    7. Healy, Paul J., 2006. "Learning dynamics for mechanism design: An experimental comparison of public goods mechanisms," Journal of Economic Theory, Elsevier, vol. 129(1), pages 114-149, July.
    8. Masuda, Takehito & Okano, Yoshitaka & Saijo, Tatsuyoshi, 2014. "The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally," Games and Economic Behavior, Elsevier, vol. 83(C), pages 73-85.
    9. Chen, Yan & Plott, Charles R., 1996. "The Groves-Ledyard mechanism: An experimental study of institutional design," Journal of Public Economics, Elsevier, vol. 59(3), pages 335-364, March.
    10. Sébastien ROUILLON, 2009. "A new mechanism to implement the Lindahl equilibriums (In French)," Cahiers du GREThA (2007-2019) 2009-09, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    11. J. Swarthout & Mark Walker, 2009. "Discrete implementation of the Groves–Ledyard mechanism," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 101-114, April.
    12. Theodore C. Bergstrom, 2003. "Vernon Smith's Insomnia and the Dawn of Economics as Experimental Science," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 181-205, June.
    13. Liu, Tracy Xiao & Lu, Jingfeng & Wang, Zhewei, 2022. "Efficient public good provision by lotteries with nonlinear pricing," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 680-698.
    14. repec:cdl:ucsbec:6-98 is not listed on IDEAS
    15. repec:dpr:wpaper:0874 is not listed on IDEAS
    16. John Ledyard & Jasmina Arifovic, 2003. "Computer Testbeds: The Dynamics of Groves-Ledyard Mechanisms," Computing in Economics and Finance 2003 244, Society for Computational Economics.
    17. Jasmina Arifovic & John Ledyard, 2004. "Scaling Up Learning Models in Public Good Games," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(2), pages 203-238, May.
    18. Arifovic, Jasmina & Ledyard, John, 2011. "A behavioral model for mechanism design: Individual evolutionary learning," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 374-395, May.
    19. OGURO Kazumasa & ISHIDA Ryo & YASUOKA Masaya, 2018. "Voluntary Provision of Public Goods and Cryptocurrency," Discussion papers 18081, Research Institute of Economy, Trade and Industry (RIETI).
    20. Katherine Silz Carson, 2013. "Incentive compatible mechanisms for providing environmental public goods," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 15, pages 434-457, Edward Elgar Publishing.
    21. Martin Shubik, 1984. "The Cooperative Form, the Value and the Allocation of Joint Costs and Benefits," Cowles Foundation Discussion Papers 706, Cowles Foundation for Research in Economics, Yale University.
    22. Stahl, Dale O., 2001. "Population rule learning in symmetric normal-form games: theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 45(1), pages 19-35, May.
    23. Elena Cettolin & Arno Riedl, 2011. "Partial Coercion, Conditional Cooperation, and Self-Commitment in Voluntary Contributions to Public Goods," CESifo Working Paper Series 3556, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:6:y:2004:i:2:p:311-335. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/apettea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.