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Procedurally fair collective provision: its requirements and experimental functionality

  • Werner Güth


    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Hartmut Kliemt

    (Frankfurt School of Finance & Management)

  • Anastasios Koukoumelis

    (Max Planck Institute of Economics, Jena)

  • M. Vittoria Levati

    (Max Planck Institute of Economics, Jena and Department of Economics, University of Verona)

  • Matteo Ploner

    (DECO-CEEL, University of Trento)

This paper derives and justifies a procedurally fair bidding mechanism and reviews experiments that apply the mechanism to public projects pro- vision. In the experiments, not all parties benefit from provision, and the projects' costs can be negative. The experimental results indicate that the mechanism is conducive to efficiency, despite the multiplicity of equilibria and underbidding incentives. The only condition is that the cost of the most efficient project must be positive.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2013-034.

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Date of creation: 10 Sep 2013
Date of revision:
Handle: RePEc:jrp:jrpwrp:2013-034
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  1. 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.
  2. Hume, David, 1739. "A Treatise of Human Nature (I) Of the Understanding," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number hume1739.
  3. 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.
  4. Werner Güth & Anastasios Koukoumelis & M. Vittoria Levati & Matteo Ploner, 2013. "Providing negative cost public projects under a fair mechanism: An experimental analysis," Jena Economic Research Papers 2013-021, Friedrich-Schiller-University Jena.
  5. Douglass C. North, 1988. "Ideology and Political/Economic Institutions," Cato Journal, Cato Journal, Cato Institute, vol. 8(1), pages 15-28, Spring/Su.
  6. Hume, David, 1740. "A Treatise of Human Nature (III) Of Morals," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number hume1740.
  7. Buchanan, James M, 1975. "A Contractarian Paradigm for Applying Economic Theory," American Economic Review, American Economic Association, vol. 65(2), pages 225-30, May.
  8. Hume, David, 1739. "A Treatise of Human Nature (II) Of the Passions," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number hume1739a.
  9. 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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