Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence
We describe an experimental comparison of the out-of-equilibrium performance of three allocation mechanisms designed to achieve Lindahl outcomes as Nash equilibria: the mechanisms due to Walker (1981), Kim (1993), and Chen (2002). We find that Chenʼs mechanism, which is supermodular, converges closest and most rapidly to its equilibrium. However, we find that the properties that move subjects toward equilibrium in Chenʼs mechanism typically generate sizeable taxes and subsidies when not in equilibrium, and correspondingly large budget surpluses and deficits, which typically far outweigh the surplus created by providing the public good. The Kim mechanism, on the other hand, converges relatively close to its equilibrium and exhibits much better out-of-equilibrium efficiency properties.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- 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.
- Yan Chen & Robert Gazzale, 2004.
"When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting,"
American Economic Review,
American Economic Association, vol. 94(5), pages 1505-1535, December.
- Yan Chen & Robert S. Gazzale, 2004. "When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting," Department of Economics Working Papers 2004-02, Department of Economics, Williams College.
- Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
- Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- J. Swarthout & Mark Walker, 2009.
"Discrete implementation of the Groves–Ledyard mechanism,"
Review of Economic Design,
Springer, vol. 13(1), pages 101-114, April.
- J. Todd Swarthout & Mark Walker, 2007. "Discrete Implementation of the Groves-Ledyard Mechanism," Experimental Economics Center Working Paper Series 2007-07, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
- 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.
- Chen, Yan & Plott, Charles R., . "The Groves-Ledyard Mechanism: An Experimental Study of Institutional Design," Working Papers 867, California Institute of Technology, Division of the Humanities and Social Sciences.
- AMIR, Rabah, 2003.
"Supermodularity and complementarity in economics: an elementary survey,"
CORE Discussion Papers
2003104, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, Southern Economic Association, vol. 71(3), pages 636-660, January.
- Kim, Taesung, 1993. "A stable Nash mechanism implementing Lindahl allocations for quasi-linear environments," Journal of Mathematical Economics, Elsevier, vol. 22(4), pages 359-371.
- Yan Chen, 2002. "A family of supermodular Nash mechanisms implementing Lindahl allocations," Economic Theory, Springer, vol. 19(4), pages 773-790.
- 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.
- Vega-Redondo, Fernando, 1989. "Implementation of Lindahl equilibrium: an integration of the static and dynamic approaches," Mathematical Social Sciences, Elsevier, vol. 18(3), pages 211-228, December.
- Hurwicz, L, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 217-25, April.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:74:y:2012:i:1:p:366-381. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.