Give and Let Give: Alternative Mechanisms Based on Voluntary Contributions

Philip D. Grech
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Philip D. Grech: Department of Management, Technology and Economics, ETH Zurich, 8092 Zurich, Switzerland

Games, 2019, vol. 10, issue 2, 1-11

Abstract: We propose a new family of mechanisms, whereby players may give more or less directly to one another. A cornerstone case is the regular linear public goods mechanism (LPGM), where all contribute into a single common group account, the total amount of which is then distributed equally among players. We show that with sufficiently (yet not necessarily fully) pro-social preferences, the social optimum can be reached in Nash equilibrium in all social dilemma situations described by our mechanisms (including the LPGM). In addition, for a given heterogeneity of pro-social preferences, we help to identify which specific mechanisms perform best in terms of incentivizing giving. Our results are therefore relevant from two vantage points. One, they provide proper rational choice benchmarks based on Nash equilibrium under the assumption of other-regarding preferences. Two, they provide arguments in favor of re-structuring many collective action problems currently implemented as LPGMs when it is feasible to gain some information concerning who has concern for whom.

Keywords: voluntary contributions; pro-social preferences; mechanism design (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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