Out-of-equilibrium performance of three Lindahl mechanisms: Experimental evidence

Matthew Van Essen, Natalia Lazzati, Mark Walker

Research output: Contribution to journalArticle

6 Scopus citations

Abstract

We describe an experimental comparison of the out-of-equilibrium performance of three allocation mechanisms designed to achieve Lindahl outcomes as Nash equilibria: the mechanisms due to Walker (1981), Kim (1993), and Chen (2002). We find that Chen's mechanism, which is supermodular, converges closest and most rapidly to its equilibrium. However, we find that the properties that move subjects toward equilibrium in Chen's mechanism typically generate sizeable taxes and subsidies when not in equilibrium, and correspondingly large budget surpluses and deficits, which typically far outweigh the surplus created by providing the public good. The Kim mechanism, on the other hand, converges relatively close to its equilibrium and exhibits much better out-of-equilibrium efficiency properties.

Original languageEnglish (US)
Pages (from-to)366-381
Number of pages16
JournalGames and Economic Behavior
Volume74
Issue number1
DOIs
StatePublished - Jan 1 2012

Keywords

  • Lindahl
  • Mechanism design
  • Public goods

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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