Public projects benefiting some and harming others: three experimental studies

Werner Güth (), Anastasios Koukoumelis, Maria Levati and Matteo Ploner
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Anastasios Koukoumelis: Max Planck Institute of Economics, Strategic Interaction Group, Jena

No 2012-034, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Based on an axiomatically derived provision rule allowing community members to endogenously determine which, if any, public project should be provided, we perform experiments where (i) not all parties benefit from provision, and (ii) the projects' "costs" can be negative. In the tradition of legal mechanism design, the proposed provision rule is widely applicable. Additionally, it relies on intuitive fairness and profitability requirements. Our results indicate that the provision rule is conducive to efficiency, despite its multiplicity of equilibria and un- derbidding incentives. The only condition is that the cost of the most efficient project is positive.

Keywords: Public project; Bidding behavior; Procedural fairness (search for similar items in EconPapers)
JEL-codes: C72 C92 D63 H44 (search for similar items in EconPapers)
Date: 2012-07-02
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-pbe and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2012-034

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