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Private Valuation of a Public Good in Three Auction Mechanisms

  • Arnaud Dragicevic

    ()

    (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)

  • David Ettinger

    ()

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS : UMR7534 - Université Paris IX - Paris Dauphine)

We evaluate the impact of three auction mechanisms--the Becker-DeGroot-Marschak (BDM) mechanism, the second-price auction (SPA), and the random nth-price auction (NPA)--in the measurement of private willingness-to-pay and willingness-to-accept for a pure public good. Our results show that the endowment effect is lower with the BDM mechanism. In this market mechanism, the effect disappears after a few repetitions. Yet, on a logarithmic scale, the random nth-price auction yields the highest speed of convergence towards equality of welfare indices. We also observe that subjects value public goods in reference to their private subjective benefit derived from their public funding.

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Paper provided by HAL in its series Post-Print with number hal-00704708.

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Date of creation: 2011
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Publication status: Published, Journal of Benefit-Cost Analysis, 2011, 2, 2, 1-27
Handle: RePEc:hal:journl:hal-00704708
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00704708
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