Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation

Takuma Wakayama () and Takehiko Yamato ()
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Takuma Wakayama: Ryukoku University
Takehiko Yamato: School of Engineering, Tokyo Institute of Technology

International Journal of Game Theory, 2023, vol. 52, issue 2, No 8, 517-553

Abstract: Abstract We compare the voluntary contribution mechanism with any mechanism attaining Pareto-efficient allocations when each agent can choose whether he/she participates in the mechanism for the provision of a non-excludable public good. We find that, in our participation game, the voluntary contribution mechanism, because of its higher participation probability in the unique symmetric mixed strategy Nash equilibrium, may perform better than any Pareto-efficient mechanism in terms of the equilibrium expected provision level of the public good and the equilibrium expected payoff of each agent. Our results suggest that the voluntary contribution mechanism, which cannot realize Pareto-efficient allocations under compulsory participation, might be superior to any Pareto-efficient mechanism if we allow agents to voluntarily choose participation in the mechanism.

Keywords: Voluntary participation; Non-excludable public goods; Voluntary contribution mechanism; Pareto-efficient mechanism; Mixed strategies (search for similar items in EconPapers)
JEL-codes: C72 D71 D78 H41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00182-022-00828-x

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