IDEAS home Printed from https://ideas.repec.org/a/spr/jogath/v52y2023i2d10.1007_s00182-022-00828-x.html
   My bibliography  Save this article

Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation

Author

Listed:
  • Takuma Wakayama

    (Ryukoku University)

  • Takehiko Yamato

    (School of Engineering, Tokyo Institute of Technology)

Abstract

We compare the voluntary contribution mechanism with any mechanism attaining Pareto-efficient allocations when each agent can choose whether he/she participates in the mechanism for the provision of a non-excludable public good. We find that, in our participation game, the voluntary contribution mechanism, because of its higher participation probability in the unique symmetric mixed strategy Nash equilibrium, may perform better than any Pareto-efficient mechanism in terms of the equilibrium expected provision level of the public good and the equilibrium expected payoff of each agent. Our results suggest that the voluntary contribution mechanism, which cannot realize Pareto-efficient allocations under compulsory participation, might be superior to any Pareto-efficient mechanism if we allow agents to voluntarily choose participation in the mechanism.

Suggested Citation

  • Takuma Wakayama & Takehiko Yamato, 2023. "Comparison of the voluntary contribution and Pareto-efficient mechanisms under voluntary participation," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 517-553, June.
    • Handle: RePEc:spr:jogath:v:52:y:2023:i:2:d:10.1007_s00182-022-00828-x
    DOI: 10.1007/s00182-022-00828-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00182-022-00828-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00182-022-00828-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
    2. Palfrey, Thomas R. & Rosenthal, Howard, 1984. "Participation and the provision of discrete public goods: a strategic analysis," Journal of Public Economics, Elsevier, vol. 24(2), pages 171-193, July.
    3. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
    4. Bag, Parimal Kanti & Mondal, Debasis, 2014. "Group size paradox and public goods," Economics Letters, Elsevier, vol. 125(2), pages 215-218.
    5. Noriaki Matsushima & Ryusuke Shinohara, 2012. "Private Provision of Public Goods that are Complements for Private Goods: Application to Open Source Software Developments," ISER Discussion Paper 0830, Institute of Social and Economic Research, Osaka University.
    6. Furusawa, Taiji & ,, 2011. "Contributing or free-riding? Voluntary participation in a public good economy," Theoretical Economics, Econometric Society, vol. 6(2), May.
    7. Sébastien Rouillon, 2013. "Anonymous implementation of the Lindahl correspondence: possibility and impossibility results," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(4), pages 1179-1203, April.
    8. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
    9. Tatsuyoshi Saijo & Yoshikatsu Tatamitani, 1994. "Characterizing neutrality in the voluntary contribution mechanism," Review of Economic Design, Springer;Society for Economic Design, vol. 1(1), pages 119-140, December.
    10. Dixit, Avinash & Olson, Mancur, 2000. "Does voluntary participation undermine the Coase Theorem?," Journal of Public Economics, Elsevier, vol. 76(3), pages 309-335, June.
    11. Hong, Fuhai & Karp, Larry, 2012. "International Environmental Agreements with mixed strategies and investment," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 685-697.
    12. Matthew J. Kotchen, 2006. "Green Markets and Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 816-845, August.
    13. Pim Heijnen, 2009. "On the probability of breakdown in participation games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 493-511, March.
    14. Saijo, T. & Yamato, T., 1997. "Fundamental Difficulties in the Provision of Public Goods: 'A Solution to the Free-Rider Problem' Twenty Years After," ISER Discussion Paper 0445, Institute of Social and Economic Research, Osaka University.
    15. L. Hurwicz, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 217-225.
    16. Saijo, Tatsuyoshi & Yamato, Takehiko, 1999. "A Voluntary Participation Game with a Non-excludable Public Good," Journal of Economic Theory, Elsevier, vol. 84(2), pages 227-242, February.
    17. Hideo Konishi & Ryusuke Shinohara, 2014. "Voluntary Participation and Provision of Public Goods in Large Finite Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 173-195, April.
    18. Tatsuyoshi Saijo, 2020. "Global Stability of Voluntary Contribution Mechanism with Heterogeneous Preferences," Working Papers SDES-2020-6, Kochi University of Technology, School of Economics and Management, revised Jul 2020.
    19. Paul Healy, 2010. "Equilibrium participation in public goods allocations," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 27-50, March.
    20. Tian, Guoqiang, 1990. "Completely feasible and continuous implementation of the Lindahl correspondence with a message space of minimal dimension," Journal of Economic Theory, Elsevier, vol. 51(2), pages 443-452, August.
    21. Guoqiang Tian, 1989. "Implementation of the Lindahl Correspondence by a Single-Valued, Feasible, and Continuous Mechanism," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 613-621.
    22. Varian, Hal R, 1994. "A Solution to the Problem of Externalities When Agents Are Well-Informed," American Economic Review, American Economic Association, vol. 84(5), pages 1278-1293, December.
    23. Hong, Fuhai & Lim, Wooyoung, 2016. "Voluntary participation in public goods provision with Coasian bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 102-119.
    24. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
    25. Hong, Fuhai & Karp, Larry, 2012. "International Environmental Agreements with mixed strategies and investment," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 685-697.
    26. Chen, Yan, 2008. "Incentive-compatible Mechanisms for Pure Public Goods: A Survey of Experimental Research," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 67, pages 625-643, Elsevier.
    27. Ryusuke Shinohara, 2009. "The possibility of efficient provision of a public good in voluntary participation games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 367-387, March.
    28. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
    29. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    30. Okada, Akira, 1993. "The Possibility of Cooperation in an n-Person Prisoners' Dilemma with Institutional Arrangements," Public Choice, Springer, vol. 77(3), pages 629-656, November.
    31. Takeshi Suzuki, 2009. "Natural implementation in public goods economies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(4), pages 647-664, November.
    32. Yan Chen, 2002. "A family of supermodular Nash mechanisms implementing Lindahl allocations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(4), pages 773-790.
    33. Taesung Kim, 1996. "A Stable Nash Mechanism For Quasi-Additive Public-Good Environments," The Japanese Economic Review, Japanese Economic Association, vol. 47(2), pages 144-156, June.
    34. Tatsuyoshi Saijo & Takehiko Yamato, 2010. "Fundamental impossibility theorems on voluntary participation in the provision of non-excludable public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 51-73, March.
    35. Matthew J. Essen, 2013. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(3), pages 363-377, June.
    36. Kim, Taesung, 1993. "A stable Nash mechanism implementing Lindahl allocations for quasi-linear environments," Journal of Mathematical Economics, Elsevier, vol. 22(4), pages 359-371.
    37. Mark Bagnoli, Barton L. Lipman, 1988. "Successful Takeovers without Exclusion," The Review of Financial Studies, Society for Financial Studies, vol. 1(1), pages 89-110.
    38. Ryusuke Shinohara, 2014. "Participation and demand levels for a joint project," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 925-952, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hirai, Toshiyuki & Shinohara, Ryusuke, 2024. "Voluntary participation in a negotiation on providing public goods and renegotiation opportunities," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 1-19.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hideo Konishi & Ryusuke Shinohara, 2014. "Voluntary Participation and Provision of Public Goods in Large Finite Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(2), pages 173-195, April.
    2. Ryusuke Shinohara, 2014. "Participation and demand levels for a joint project," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 925-952, December.
    3. , J. & ,, 2012. "Designing stable mechanisms for economic environments," Theoretical Economics, Econometric Society, vol. 7(3), September.
    4. Yukihiro Nishimura & Ryusuke Shinohara, 2013. "A voluntary participation game through a unit-by-unit cost share mechanism of a non-excludable public good," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(3), pages 793-814, March.
    5. Hong, Fuhai & Lim, Wooyoung, 2016. "Voluntary participation in public goods provision with Coasian bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 102-119.
    6. Noriaki Matsushima & Ryusuke Shinohara, 2015. "The efficiency of monopolistic provision of public goods through simultaneous bilateral bargaining," ISER Discussion Paper 0948, Institute of Social and Economic Research, Osaka University.
    7. Paul Pecorino, 2015. "Olson’s Logic of Collective Action at fifty," Public Choice, Springer, vol. 162(3), pages 243-262, March.
    8. Hassan Benchekroun & Charles Figuières & Mabel Tidball, 2016. "Implementation of the Lindahl Correspondance via Simple Indirect Mechanisms," Working Papers halshs-01378460, HAL.
    9. Furusawa, Taiji & ,, 2011. "Contributing or free-riding? Voluntary participation in a public good economy," Theoretical Economics, Econometric Society, vol. 6(2), May.
    10. Healy, Paul J. & Jain, Ritesh, 2017. "Generalized Groves–Ledyard mechanisms," Games and Economic Behavior, Elsevier, vol. 101(C), pages 204-217.
    11. Matsushima, Noriaki & Shinohara, Ryusuke, 2019. "Pre-negotiation commitment and internalization in public good provision through bilateral negotiations," Journal of Public Economics, Elsevier, vol. 175(C), pages 84-93.
    12. Noriaki Matsushima & Ryusuke Shinohara, 2012. "Private Provision of Public Goods that are Complements for Private Goods: Application to Open Source Software Developments," ISER Discussion Paper 0830, Institute of Social and Economic Research, Osaka University.
    13. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288, Elsevier.
    14. Tian, Guoqiang, 1997. "Virtual implementation in incomplete information environments with infinite alternatives and types," Journal of Mathematical Economics, Elsevier, vol. 28(3), pages 313-339, October.
    15. Matt Van Essen, 2015. "Bartering Games in the Kolm Triangle," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(3), pages 297-310, June.
    16. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    17. Van Essen, Matthew J., 2008. "A Simple Supermodular Mechanism that Implements Lindahl Allocations," MPRA Paper 12781, University Library of Munich, Germany.
    18. Cason, Timothy N. & Saijo, Tatsuyoshi & Yamato, Takehiko & Yokotani, Konomu, 2004. "Non-excludable public good experiments," Games and Economic Behavior, Elsevier, vol. 49(1), pages 81-102, October.
    19. Van Essen, Matthew & Walker, Mark, 2017. "A simple market-like allocation mechanism for public goods," Games and Economic Behavior, Elsevier, vol. 101(C), pages 6-19.
    20. Sertel, Murat R. & Sanver, M. Remzi, 1999. "Equilibrium outcomes of Lindahl-endowment pretension games1," European Journal of Political Economy, Elsevier, vol. 15(2), pages 149-162, June.

    More about this item

    Keywords

    Voluntary participation; Non-excludable public goods; Voluntary contribution mechanism; Pareto-efficient mechanism; Mixed strategies;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jogath:v:52:y:2023:i:2:d:10.1007_s00182-022-00828-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.