Implementing Lindahl Allocation - Incorporating Experimental Observations into Mechanism Design Theory

Persistent Link:
http://hdl.handle.net/10150/195026
Title:
Implementing Lindahl Allocation - Incorporating Experimental Observations into Mechanism Design Theory
Author:
Van Essen, Matthew J.
Issue Date:
2010
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
Mechanism design theory has given economists a set of tools for designing institutions to achieve socially desirable outcomes. Unfortunately, the behavioral assumptions that these theories often rest are somewhat unrealistic. Testing these institutions in a laboratory setting gives us insight into what assumptions or properties of institutions make them behaviorally successful. Moreover these insights allow us to create new theories that offer, in principle, better actual performance. Thus, the interplay between experimental economics and economic theory seems vital in mechanism design to insure successful institutions. It is in this spirit that this dissertation precedes focusing entirely with mechanisms that were designed to achieve the Lindahl allocation in a public goods environment. The first chapter experimentally examines three such mechanisms in a laboratory setting. It finds that the mechanism that gets the closest to the Lindahl allocation is the one that induces a game with very strong stability of equilibrium properties. Unfortunately this mechanism also has some clear disadvantages: first, it is very complicated; second, payoffs to consumers while learning to play equilibrium are very low; and last, the mechanism gets more complicated when more people participate. The second chapter uses the insights from the first experiment to create a new institution which avoids some of the concerns outlined above while maintaining the strong stability of equilibrium property. The third chapter contributes a missing stability result into the literature. The final chapter of the dissertation experimentally compares the new mechanism introduced in chapter 2 with the most successful mechanism from the first experiment. The treatments in this experiment are designed to stress the above observed trouble areas.
Type:
text; Electronic Dissertation
Keywords:
Experimental Mechanism Design; Free Riding; Lindahl Equilibrium; Mechanism Design; Nash Implementation; Public Goods
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Economics; Graduate College
Degree Grantor:
University of Arizona
Advisor:
Wooders, John C.; Walker, Mark
Committee Chair:
Wooders, John C.; Walker, Mark

Full metadata record

DC FieldValue Language
dc.language.isoENen_US
dc.titleImplementing Lindahl Allocation - Incorporating Experimental Observations into Mechanism Design Theoryen_US
dc.creatorVan Essen, Matthew J.en_US
dc.contributor.authorVan Essen, Matthew J.en_US
dc.date.issued2010en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractMechanism design theory has given economists a set of tools for designing institutions to achieve socially desirable outcomes. Unfortunately, the behavioral assumptions that these theories often rest are somewhat unrealistic. Testing these institutions in a laboratory setting gives us insight into what assumptions or properties of institutions make them behaviorally successful. Moreover these insights allow us to create new theories that offer, in principle, better actual performance. Thus, the interplay between experimental economics and economic theory seems vital in mechanism design to insure successful institutions. It is in this spirit that this dissertation precedes focusing entirely with mechanisms that were designed to achieve the Lindahl allocation in a public goods environment. The first chapter experimentally examines three such mechanisms in a laboratory setting. It finds that the mechanism that gets the closest to the Lindahl allocation is the one that induces a game with very strong stability of equilibrium properties. Unfortunately this mechanism also has some clear disadvantages: first, it is very complicated; second, payoffs to consumers while learning to play equilibrium are very low; and last, the mechanism gets more complicated when more people participate. The second chapter uses the insights from the first experiment to create a new institution which avoids some of the concerns outlined above while maintaining the strong stability of equilibrium property. The third chapter contributes a missing stability result into the literature. The final chapter of the dissertation experimentally compares the new mechanism introduced in chapter 2 with the most successful mechanism from the first experiment. The treatments in this experiment are designed to stress the above observed trouble areas.en_US
dc.typetexten_US
dc.typeElectronic Dissertationen_US
dc.subjectExperimental Mechanism Designen_US
dc.subjectFree Ridingen_US
dc.subjectLindahl Equilibriumen_US
dc.subjectMechanism Designen_US
dc.subjectNash Implementationen_US
dc.subjectPublic Goodsen_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineEconomicsen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorWooders, John C.en_US
dc.contributor.advisorWalker, Marken_US
dc.contributor.chairWooders, John C.en_US
dc.contributor.chairWalker, Marken_US
dc.contributor.committeememberDufwenberg, Martinen_US
dc.contributor.committeememberAmir, Rabahen_US
dc.identifier.proquest10981en_US
dc.identifier.oclc659754903en_US
All Items in UA Campus Repository are protected by copyright, with all rights reserved, unless otherwise indicated.