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Choosing and Sharing

Jérémy Laurent-Lucchetti and Justin Leroux

No 07-13, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: Choosing a project for which benefits accrue to all involved agents but brings major costs or additional benefits to only one agent is often problematic. Siting a nationwide nuclear waste disposal or hosting a major sporting event are examples of such a problem: costs or benefits are tied to the identity of the host of the project. Our goals are twofold: to choose the efficient site (the host with the lowest cost or the highest localized surplus) and to share the cost, or surplus, in a predetermined way so as to achieve redistributive goals. We propose a simple mechanism to implement both objectives. The unique subgame-perfect Nash equilibrium of our mechanism coincides with truthtelling, is efficient, budget-balanced and immune to coalitional deviations.

Pages: 24 pages
Date: 2007-12
New Economics Papers: this item is included in nep-gth and nep-ppm
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http://www.hec.ca/iea/cahiers/2007/iea0713_jleroux.pdf (application/pdf)

Related works:
Journal Article: Choosing and sharing (2011) Downloads
Working Paper: Choosing and Sharing (2009) Downloads
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