Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence

Matthew Van Essen, Natalia Lazzati and Mark Walker

Games and Economic Behavior, 2012, vol. 74, issue 1, 366-381

Abstract: We describe an experimental comparison of the out-of-equilibrium performance of three allocation mechanisms designed to achieve Lindahl outcomes as Nash equilibria: the mechanisms due to Walker (1981), Kim (1993), and Chen (2002). We find that Chenʼs mechanism, which is supermodular, converges closest and most rapidly to its equilibrium. However, we find that the properties that move subjects toward equilibrium in Chenʼs mechanism typically generate sizeable taxes and subsidies when not in equilibrium, and correspondingly large budget surpluses and deficits, which typically far outweigh the surplus created by providing the public good. The Kim mechanism, on the other hand, converges relatively close to its equilibrium and exhibits much better out-of-equilibrium efficiency properties.

Keywords: Public goods; Mechanism design; Lindahl (search for similar items in EconPapers)
JEL-codes: C92 H41 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:74:y:2012:i:1:p:366-381

DOI: 10.1016/j.geb.2011.04.005

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