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Uniform price mechanisms for threshold public goods provision with complete information: An experimental investigation

Listed author(s):
  • Li, Zhi
  • Anderson, Christopher M.
  • Swallow, Stephen K.

We introduce two novel 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. UPC has the same undominated perfect equilibria as standard provision point (PPM) and proportional rebate (PR) mechanisms, and UPA a somewhat broader set. However, our mechanisms' different marginal penalty structures may facilitate equilibrium selection and lead to higher contributions and more frequent provision. Through laboratory experiments, using both homogeneous (symmetric) and heterogeneous induced values, we show our mechanisms improve upon PR and PPM: UPC generates higher aggregate contributions than PR and PPM, leading to higher provision rates than PPM; UPA attracts much higher contributions, although it provides less frequently. This ranking emerges because high offers are more common (especially among high value people in the heterogeneous environment) in the uniform price mechanisms, where higher offers only increase the payment when needed for provision.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047272716301323
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 144 (2016)
Issue (Month): C ()
Pages: 14-26

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Handle: RePEc:eee:pubeco:v:144:y:2016:i:c:p:14-26
DOI: 10.1016/j.jpubeco.2016.09.004
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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