On a mechanism that improves efficiency and reduces inequality in voluntary contribution games

Rod Falvey, Tom Lane and Shravan Luckraz

Games and Economic Behavior, 2025, vol. 150, issue C, 518-536

Abstract: We consider the class of linear voluntary contribution games under the general assumption of heterogeneous endowments. In this context, we generalize the Galbraith Mechanism (GM) and assess its performance relative to a fixed equal sharing allocation in both theory and experiments. Three main empirical results emerge. First, the GM raises average contributions significantly above those under an equal-shares allocation. Second, the GM simultaneously reduces income inequality as it improves efficiency. Third, a player's contribution and allocation behavior is sensitive to her position in the endowment distribution. In all their decision-making, agents consistently place greater emphasis on absolute contribution levels when they are rich, and on contribution ratios (contributions relative to endowments) when they are poor.

Date: 2025
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Working Paper: On a mechanism that improves efficiency and reduces inequality in voluntary contribution games (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:150:y:2025:i:c:p:518-536

DOI: 10.1016/j.geb.2025.01.011

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