Does the Varian Mechanism Work? -Emissions Trading as an Example
This paper investigates whether Varian's (1994) compensation mechanism can work in a laboratory. The results show that this mechanism does not work as in the theory. We found that the magnitude of penalties crucially affects subjects' behavior.
|Date of creation:||Feb 2004|
|Date of revision:|
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- Varian, H,R., 1991.
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10, Michigan - Center for Research on Economic & Social Theory.
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- Weimann, Joachim & Yang, Chun-Lei & Vogt, Carsten, 2000. "An experiment on sequential rent-seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 405-426, April.
- 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.
- 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.
- Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
- Harrison, Glenn W, 1989. "Theory and Misbehavior of First-Price Auctions," American Economic Review, American Economic Association, vol. 79(4), pages 749-62, September.
- Misiolek, Walter S. & Elder, Harold W., 1989. "Exclusionary manipulation of markets for pollution rights," Journal of Environmental Economics and Management, Elsevier, vol. 16(2), pages 156-166, March.
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