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Private Valuation of a Public Good in Three Auction Mechanisms

Arnaud Dragicevic () and David Ettinger ()
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Arnaud Dragicevic: THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique

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Abstract: We evaluate the impact of three auction mechanisms--the Becker-DeGroot-Marschak (BDM) mechanism, the second-price auction (SPA), and the random nth-price auction (NPA)--in the measurement of private willingness-to-pay and willingness-to-accept for a pure public good. Our results show that the endowment effect is lower with the BDM mechanism. In this market mechanism, the effect disappears after a few repetitions. Yet, on a logarithmic scale, the random nth-price auction yields the highest speed of convergence towards equality of welfare indices. We also observe that subjects value public goods in reference to their private subjective benefit derived from their public funding.

Keywords: WTP-WTA disparity; auction mechanisms; public goods; private provisions (search for similar items in EconPapers)
Date: 2011
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00704708
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Published in Journal of Benefit-Cost Analysis, Cambridge University Press, 2011, 2 (2), pp.1-27

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Journal Article: Private Valuation of a Public Good in Three Auction Mechanisms (2011) Downloads
Journal Article: Private Valuation of a Public Good in Three Auction Mechanisms (2011) Downloads
Working Paper: Private Valuation of a Public Good in Three Auction Mechanisms (2010) Downloads
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