Uniform price mechanisms for threshold public goods provision with complete information: An experimental investigation

Zhi Li, Christopher M. Anderson and Stephen Swallow ()

Journal of Public Economics, 2016, vol. 144, issue C, 14-26

Abstract: We introduce two novel mechanisms for provision point public goods, motivated by the design of uniform price auctions: The uniform price auction mechanism (UPA) collects an endogenously determined uniform price from everyone offering at least that price, while the uniform price cap mechanism (UPC) collects the uniform price from everyone offering at least that price, plus the full offer of everyone offering less. UPC has the same undominated perfect equilibria as standard provision point (PPM) and proportional rebate (PR) mechanisms, and UPA a somewhat broader set. However, our mechanisms' different marginal penalty structures may facilitate equilibrium selection and lead to higher contributions and more frequent provision. Through laboratory experiments, using both homogeneous (symmetric) and heterogeneous induced values, we show our mechanisms improve upon PR and PPM: UPC generates higher aggregate contributions than PR and PPM, leading to higher provision rates than PPM; UPA attracts much higher contributions, although it provides less frequently. This ranking emerges because high offers are more common (especially among high value people in the heterogeneous environment) in the uniform price mechanisms, where higher offers only increase the payment when needed for provision.

Keywords: Uniform price auction; Uniform price cap; Proportional rebate; Provision point mechanism (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:144:y:2016:i:c:p:14-26

DOI: 10.1016/j.jpubeco.2016.09.004

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