The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally

Takehito Masuda, Yoshitaka Okano and Tatsuyoshi Saijo ()

Games and Economic Behavior, 2014, vol. 83, issue C, 73-85

Abstract: We propose the minimum approval mechanism (MAM) for a standard linear public good environment with two players. Players simultaneously and privately choose their contributions to the public good in the first stage. In the second stage, they simultaneously decide whether to approve the otherʼs choice. Both contribute what they choose in the first stage if both players approve; otherwise, both contribute the minimum of the two choices in the first stage. The MAM implements the Pareto-efficient allocation in multiple solution concepts including backward elimination of weakly dominated strategies (BEWDS), limit logit agent quantal response equilibrium, subgame perfect minimax regret equilibrium, level-k thinking, and diagonalization heuristics. Moreover, the MAM is unique under plausible conditions. Overall, contributions in the MAM experiment averaged 94.9%. Quantifying subjectsʼ responses to the questionnaire reveal heterogeneous reasoning processes and highlight the importance of developing mechanisms that implement the desired social choice outcome in multiple solution concepts.

Keywords: Public good experiment; Approval mechanism; Multiple implementation (search for similar items in EconPapers)
JEL-codes: C72 C92 D74 H41 P43 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:83:y:2014:i:c:p:73-85

DOI: 10.1016/j.geb.2013.10.003

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