Publication Type
Journal Article
Version
acceptedVersion
Publication Date
3-2021
Abstract
This paper characterizes mechanisms satisfying incentive compatibility and individual rationality 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. The main contribution of this paper is the characterization of the budget-surplus maximizing mechanism satisfying incentive compatibility and individual rationality (Theorem 1 for Bayesian implementation and Theorem 3 for dominant strategy implementation) that applies to a finite discretization over the standard model. Making use of the proposed budget-surplus maximizing mechanisms, we show that some known results do not need the agents’ risk neutrality, whereas some others do rely on the agents’ risk neutrality in a subtle manner. Furthermore, we improve upon some known results and obtain new results which do not exist in the standard model.
Keywords
Budget balance, decision efficiency, incentive compatibility, individual rationality; mechanisms; public goods
Discipline
Economic Theory | Public Economics
Research Areas
Economic Theory
Publication
Social Choice and Welfare
Volume
57
First Page
431
Last Page
468
ISSN
0176-1714
Identifier
10.1007/s00355-021-01329-8
Publisher
Springer
Citation
KUNIMOTO, Takashi and ZHANG, Cuiling.
On incentive compatible, individually rational public good provision mechanisms. (2021). Social Choice and Welfare. 57, 431-468.
Available at: https://ink.library.smu.edu.sg/soe_research/2540
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1007/s00355-021-01329-8