Providing negative cost public projects under a fair mechanism: An experimental analysis
This paper experimentally examines a procedurally fair provision mech- anism allowing members of a small community to determine, via their bids, which of four alternative public projects to implement. Previous experi- ments with positive cost projects have demonstrated that the mechanism is efficiency enhancing. Our experiment tests whether the mechanism re- mains conducive to efficiency when negative cost, but less efficient, projects are made available. We find that this is not the case. On the other hand, we detect no significant difference in bid levels depending on whether mixed feelings are present or absent, and on whether the others' valuations are known or unknown.
|Date of creation:||13 May 2013|
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- Güth, Werner & Vittoria Levati, M. & Montinari, Natalia, 2014.
"Ranking alternatives by a fair bidding rule: A theoretical and experimental analysis,"
European Journal of Political Economy,
Elsevier, vol. 34(C), pages 206-221.
- Werner Güth & M. Vittoria Levati & Natalia Montinari, 2012. "Ranking alternatives by a fair bidding rule: a theoretical and experimental analysis," Jena Economic Research Papers 2012-005, Friedrich-Schiller-University Jena.
- Smith, Vernon L, 1977. "The Principle of Unanimity and Voluntary Consent in Social Choice," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1125-39, December.
- Guth, Werner, 1986. "Auctions, public tenders, and fair division games: An axiomatic approach," Mathematical Social Sciences, Elsevier, vol. 11(3), pages 283-294, June.
- Sarah Jacobson & Jason Delaney, 2012. "The Good of the Few: Reciprocity in the Provision of a Public Bad," Department of Economics Working Papers 2012-02, Department of Economics, Williams College.
- Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati, 2011. ""One man's meat is another man's poison." An experimental study of voluntarily providing public projects that raise mixed feelings," Jena Economic Research Papers 2011-034, Friedrich-Schiller-University Jena.
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