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The Pivotal Mechanism Revisited: Some Evidence on Group Manipulation

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  • Anita Gantner

    ()

  • Wolfgang H�chtl

    ()

  • Rupert Sausgruber

    ()

Abstract

This paper studies the vulnerability of the pivotal mechanism with respect to manipulation by groups. In a lab experiment, groups decide on the implementation of various alternatives, some of which imply opposite interests for the two subgroups. We investigate the occurrence of tacit and explicit collusion by allowing for communication within subgroups in one treatment and prohibiting it in another. Even though all agents' preferences are common knowledge and there exists a simple symmetric collusive strategy for one subgroup, we find little evidence for tacit collusion, not even with increasing experience. Only when explicit communication is allowed, collusion is established, and it becomes even more pronounced over time.

Suggested Citation

  • Anita Gantner & Wolfgang H�chtl & Rupert Sausgruber, 2011. "The Pivotal Mechanism Revisited: Some Evidence on Group Manipulation," Working Papers 2011-15, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2011-15
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    Keywords

    Collective Decision Making; Pivotal Mechanism; Collusion;

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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