Efficient allocation and unanimous consent with incomplete demand disclosures?

R. Brubaker

Public Choice, 1986, vol. 48, issue 3, 217-227

Abstract: The following hypothesis about behavior in collective economic decisions is proposed. Individuals disclose latent demands accurately provided that doing so results in no appreciable loss of opportunity for material gain. On the foundation of this behavioral hypothesis, the following procedure is suggested. A collective good intermediary (CGI) solicits reports about latent demand schedules from a sample whose replies will not appreciably affect their own cost-shares. The CGI uses their reports to estimate the statically efficient program size and tax-shares adequate to finance it. The CGI then presents a proposal to the entire pertinent population on a this-or-nothing basis. If approved nearly uanimously, the proposal is adopted. It is concluded that if a program is worth adopting, i.e., generates a positive, aggregate net benefit, complete disclosure by all will not be needed to finance it. Most participants may, therefore, not need to estimate, even for themselves, their maximum personal benefit. The task of setting cost-shares to attain nearly unanimous consent will be easier the greater the aggregate gain from the efficient choice. Copyright Martinus Nijhoff Publishers 1986

Date: 1986
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DOI: 10.1007/BF00051619

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