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Experimental Social Planners: Good Natured, but Overly Optimistic

Christoph Engel () and Svenja Hippel ()
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Svenja Hippel: Max Planck Institute for Research on Collective Goods

No 2017_23, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same ?nal payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.

Keywords: Public Good; Social Planner; Truthtelling; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D02 D03 D61 D62 D64 H23 K12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-law and nep-ppm
Date: 2017-11
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