Munich Personal RePEc Archive

Choosing and Sharing

Laurent-Lucchetti, Jérémy and Leroux, Justin (2009): Choosing and Sharing.

[img]
Preview
PDF
MPRA_paper_14929.pdf

Download (248Kb) | Preview

Abstract

Implementing a project, like a nationwide nuclear waste disposal, which benefits all involved agents but brings major costs only to the host is often problematic. In practice, revelation issues and redistributional concerns are significant obstacles to achieving stable agreements. We address these issues by proposing the first mechanism to implement the efficient site (the host with the lowest cost) and share the exact cost while retaining total control over realized transfers. Our mechanism is simple and in the vein of the well-known Divide and Choose procedure. The unique Nash equilibrium outcome of our mechanism coincides with truthtelling, is budget-balanced, individually rational and immune to coalitional deviations. More generally, our mechanism can also handle the symmetric case of positive local externalities (e.g., Olympic Games) and even more complex situations where the usefulness of the project---regardless of its location---is not unanimous.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.