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On Incentive Compatible, Individually Rational Public Good Provision Mechanisms

Takashi Kunimoto and Cuiling Zhang ()
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Cuiling Zhang: School of Economics, Singapore Management University

No 21-2018, Economics and Statistics Working Papers from Singapore Management University, School of Economics

Abstract: This paper characterizes mechanisms satisfying Bayesian incentive compatibility (BIC) and interim individual rationality (IIR) 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. Although the standard model and more generally a continuum type space are widely used in the literature, it is nonetheless an abstraction of reality. Given that the public good provision problem has occupied a central application in the theory of mechanism design, we propose a "stress test" for the results in the standard model by subjecting them to a fi nite discretization over the standard model. The main contribution of this paper is that many of the known results gained within the standard continuum type space also hold when it is replaced by a discrete type space.

Keywords: Budget balance; decision efficiency; incentive compatibility; individual rationality; mechanisms; public goods (search for similar items in EconPapers)
JEL-codes: C72 D78 D82 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-11-20
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic and nep-sea
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