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An Experimental Comparison of Collective Choice Procedures for Excludable Public Goods

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  • Sean Gailmard
  • Thomas R. Palfrey

Abstract

This paper compares three collective choice procedures for the provision of excludable public goods under incomplete information. One, serial cost sharing (SCS), is budget balanced, individually rational, anonymous, and strategy proof. The other two are "hybrid" procedures: voluntary cost sharing with proportional rebates (PCS) and with no rebates (NR). PCS satisfies all these properties except strategy proofness, and NR satisfies all the properties except for strategy proofness and budget balance. However, PCS and NR do not exclude any potential users, and they do not require equal cost shares, thereby overcoming the two main sources of inefficiency with SCS. We characterize the Bayesian Nash equilibria of the hybrid mechanisms and conduct laboratory experiments to compare the performance of the three mechanisms. We find that PCS produces significantly more efficient allocations than either SCS or NR.

Suggested Citation

  • Sean Gailmard & Thomas R. Palfrey, 2002. "An Experimental Comparison of Collective Choice Procedures for Excludable Public Goods," Working Papers 0214, Harris School of Public Policy Studies, University of Chicago.
  • Handle: RePEc:har:wpaper:0214
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    Cited by:

    1. Cox, Caleb A., 2015. "Cursed beliefs with common-value public goods," Journal of Public Economics, Elsevier, vol. 121(C), pages 52-65.
    2. Grüner, Hans Peter & Siemroth, Christoph, 2015. "Cutting out the Middleman: Crowdinvesting, Efficiency, and Inequality," CEPR Discussion Papers 10488, C.E.P.R. Discussion Papers.
    3. Laura Razzolini & Michael Reksulak & Robert Dorsey, 2007. "An Experimental Evaluation of the Serial Cost Sharing Rule," Theory and Decision, Springer, vol. 63(3), pages 283-314, November.
    4. repec:eee:ecolec:v:143:y:2018:i:c:p:236-252 is not listed on IDEAS
    5. Swallow, Stephen K. & Anderson, Christopher M. & Uchida, Emi, 2018. "The Bobolink Project: Selling Public Goods From Ecosystem Services Using Provision Point Mechanisms," Ecological Economics, Elsevier, vol. 143(C), pages 236-252.
    6. Zhi Li & Christopher Anderson & Stephen K. Swallow, 2012. "Uniform Price Mechanisms for Threshold Public Goods Provision: An Experimental Investigation," Working Papers 14, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    7. Cox, Caleb, 2014. "Cursed beliefs with common-value public goods," MPRA Paper 53074, University Library of Munich, Germany.
    8. Li, Zhi & Anderson, Christopher M. & Swallow, Stephen K., 2016. "Uniform price mechanisms for threshold public goods provision with complete information: An experimental investigation," Journal of Public Economics, Elsevier, vol. 144(C), pages 14-26.

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