Dynamic Stability of Nash-Efficient Public Goods Mechanisms: Reconciling Theory and Experiments

  • Yan Chen
Conference paper

DOI: 10.1007/0-387-24243-0_10

Cite this paper as:
Chen Y. (2005) Dynamic Stability of Nash-Efficient Public Goods Mechanisms: Reconciling Theory and Experiments. In: Rapoport A., Zwick R. (eds) Experimental Business Research. Springer, Boston, MA

Abstract

We propose to use supermodularity as a robust dynamic stability criterion for public goods mechanisms with a unique Nash equilibrium. Among existing public goods mechanisms whose Nash equilibria are Pareto efficient, the Groves-Ledyard mechanism is a supermodular game if and only if the punishment parameter is sufficiently high, while none of the Hurwicz, Walker and Kim mechanisms is supermodular in a quasilinear environment. The Falkinger mechanism is a supermodular game in a quadratic environment if and only if the subsidy coefficient is greater than or equal to one. These results are consistent with the findings in seven experimental studies.

Keywords

public goods mechanisms supermodular games experiments 

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Copyright information

© Springer 2005

Authors and Affiliations

  • Yan Chen
    • 1
  1. 1.University of MichiganUSA

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