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Community Projects: An Experimental Analysis of a Fair Implementation Process

  • Simona Cicognani

    (School of Social Sciences, University of Trento, Italy)

  • Aanna D'Ambrosio

    (School of Social Sciences, University of Trento, Italy)

  • Werner Güth


    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Simone Pfuderer

    (School of Social Sciences, University of Trento, Italy)

  • Matteo Ploner

    (Cognitive and Experimental Economics Laboratory, University of Trento, Italy)

We define and experimentally test a public provision mechanism that meets three basic ethical requirements and allows community members to influence, via monetary bids, which of several projects is implemented. For each project, participants are assigned personal values, which can be positive or negative. We provide either complete or only private information about others' personal values. This produces two distinct public provision games which are experimentally implemented and analysed for various projects. In spite of the complex experimental task, participants do not rely on truth-telling as an obvious and simple heuristic whose general acceptance would result in fair and efficient outcomes. Rather, they yield to strategic underbidding. Although underbidding is affected by projects' characteristics, the provision mechanism seems quite functional.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2012-015.

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Date of creation: 05 Apr 2012
Date of revision:
Handle: RePEc:jrp:jrpwrp:2012-015
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