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The Pivotal Mechanism Versus the Voluntary Contribution Mechanism: An Experimental Comparison

Author

Listed:
  • Tatsuki Homma

    (Graduate School of Decision Science and Technology, Tokyo Institute of Technology, Japan)

  • Junyi Shen

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan, and School of Economics, Shanghai University, China)

  • Takuma Wakayama

    (Faculty of Economics, Ryukoku University, Japan)

  • Hirofumi Yamamura

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

We conduct an experimental comparison of two well-known mechanisms for undertaking a binary public project: the pivotal mechanism and the voluntary contribution mechanism. We compare the two mechanisms under complete information in which each subject knows the other subjects'payoffs. We then observe that the voluntary contribution mechanism works better than the pivotal mechanism from the perspectives of Pareto efficiency and individual rationality. On the other hand, we observe that the pivotal mechanism works better than the voluntary contribution mechanism in light of decision efficiency. These results suggest that whenever we insist on either Pareto efficiency or individual rationality, the voluntary contribution mechanism is more favorable than the pivotal mechanism in practical applications.

Suggested Citation

  • Tatsuki Homma & Junyi Shen & Takuma Wakayama & Hirofumi Yamamura, 2018. "The Pivotal Mechanism Versus the Voluntary Contribution Mechanism: An Experimental Comparison," Discussion Paper Series DP2018-23, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2018-23
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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