On incentive compatible, individually rational public good provision mechanisms

Takashi Kunimoto and Cuiling Zhang ()
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Cuiling Zhang: Dongbei University of Finance and Economics

Social Choice and Welfare, 2021, vol. 57, issue 2, No 8, 468 pages

Abstract: Abstract This paper characterizes mechanisms satisfying incentive compatibility and individual rationality in the classical public good provision problem. Many papers in the literature obtain the results in the so-called standard model of ex ante identical agents with a continuous, closed interval of types. The main contribution of this paper is the characterization of the budget-surplus maximizing mechanism satisfying incentive compatibility and individual rationality (Theorem 1 for Bayesian implementation and Theorem 3 for dominant strategy implementation) that applies to a finite discretization over the standard model. Making use of the proposed budget-surplus maximizing mechanisms, we show that some known results do not need the agents’ risk neutrality, whereas some others do rely on the agents’ risk neutrality in a subtle manner. Furthermore, we improve upon some known results and obtain new results which do not exist in the standard model.

Date: 2021
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Working Paper: On Incentive Compatible, Individually Rational Public Good Provision Mechanisms (2018)
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DOI: 10.1007/s00355-021-01329-8

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