Dynamic Stability of Nash-Efficient Public Goods Mechanisms: Reconciling Theory and Experiments

Yan Chen

Chapter Chapter 10 in Experimental Business Research, 2005, pp 185-200 from Springer

Abstract: Abstract We propose to use supermodularity as a robust dynamic stability criterion for public goods mechanisms with a unique Nash equilibrium. Among existing public goods mechanisms whose Nash equilibria are Pareto efficient, the Groves-Ledyard mechanism is a supermodular game if and only if the punishment parameter is sufficiently high, while none of the Hurwicz, Walker and Kim mechanisms is supermodular in a quasilinear environment. The Falkinger mechanism is a supermodular game in a quadratic environment if and only if the subsidy coefficient is greater than or equal to one. These results are consistent with the findings in seven experimental studies.

Keywords: public goods mechanisms; supermodular games; experiments (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/0-387-24243-0_10

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