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Contribution-Based Grouping under Noise

Author

Listed:
  • Heinrich H. Nax

    (Computational Social Science, ETH Zürich, 8092 Zürich, Switzerland)

  • Ryan O. Murphy

    (Department of Economics, University of Zurich, 8006 Zürich, Switzerland
    Morningstar Inc., Behavioral Science Group, Chicago, IL 60602, USA)

  • Stefano Duca

    (Computational Social Science, ETH Zürich, 8092 Zürich, Switzerland)

  • Dirk Helbing

    (Computational Social Science, ETH Zürich, 8092 Zürich, Switzerland)

Abstract

Many real-world mechanisms are “noisy” or “fuzzy”, that is the institutions in place to implement them operate with non-negligible degrees of imprecision and error. This observation raises the more general question of whether mechanisms that work in theory are also robust to more realistic assumptions such as noise. In this paper, in the context of voluntary contribution games, we focus on a mechanism known as “contribution-based competitive grouping”. First, we analyze how the mechanism works under noise and what happens when other assumptions such as population homogeneity are relaxed. Second, we investigate the welfare properties of the mechanism, interpreting noise as a policy instrument, and we use logit dynamic simulations to formulate mechanism design recommendations.

Suggested Citation

  • Heinrich H. Nax & Ryan O. Murphy & Stefano Duca & Dirk Helbing, 2017. "Contribution-Based Grouping under Noise," Games, MDPI, vol. 8(4), pages 1-23, November.
    • Handle: RePEc:gam:jgames:v:8:y:2017:i:4:p:50-:d:119204
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    References listed on IDEAS

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