Laurent-Lucchetti, Jérémy and Leroux, Justin (2009): Choosing and Sharing.
Download (254kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Choosing and Sharing|
|Keywords:||Public goods; local externalities; NIMBY; implementation; mechanism design; VCG mechanisms|
|Subjects:||H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods
D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General
|Depositing User:||Unnamed user with email firstname.lastname@example.org|
|Date Deposited:||01. May 2009 05:15|
|Last Modified:||20. Feb 2013 19:49|
 D'Aspremont, C. and L. Gerard-Varey. 1979. On Bayesian incentive compatible mechanisms, in "Aggregation and Revelation of Preferences. (J. J. Laont, Ed.), North-Holland, Amsterdam.
 Easterling, D. 1992. "Fair Rules for Siting a High-Level Nuclear Waste Repository." Journal of Policy Analysis and Management, 11, 442-475.
 Ehlers, . 2008. "Choosing Wisely: The Natural Multi-Bidding Mechanism." Economic Theory, forthcoming.
 Frey, B. S., F. Oberholzer-Gee, and R. Eichenberger. 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Mar." The Journal of Political Economy, 104, 1297-1313.
 Gerrard, M. B. 1994. Whose Backyard, Whose Risk: Fear and Fairness in Toxic and Nuclear Waste Siting. The MIT Press.  Glazer, J. and CT. A. Ma. 1989."Ecient allocation of a "prize"King Solomon's dilemma." Games and Economic Behavior, 1(3), 222-233.
 Green, J. and J.J. Laont. 1979. Incentives in Public Decision Making. (J. J. Laont, Ed.), North-Holland, Amsterdam.
 Jackson, M. 2001. "A crash course in implementation theory." Social Choice and Welfare, 18, 655-708.
 Jackson, M. and H. Moulin. 1992. "Implementing a Public Project and Distributing its Cost." Journal of Economic Theory, 57(1), 125-140.
 Jehiel, P., B. Moldonavu and E. Stacchetti. 1996. "How (Not) to Sell Nuclear Weapons." American Economic Review, 86(4), 814-29.
11] Kunreuther, H. and P. Kleindorfer. 1986. "A sealed-bid auction mechanism for siting noxious facilities." American Economic Review, 76, 295-299.
 Kunreuther, H., J. Linneroth-Bayer, and K. Fitzgerald. 1994. Siting Hazardous Facilities: Lessons from Europe and America., The Wharton Risk Management and Decision Processes Center, Working Paper no 94-08-22.
 Laurent-Lucchetti, J. and J. Leroux. 2009. "Axiomatic foundation for Lindahl pricing in the NIMBY context" mimeo, HEC Montréal.
 Mailath, G and A. Postlewaite, 1990. "Asymmetric information bargaining problems with many agents." Review of Economic Studies, 57, issue 3, 351-67.
 Maskin, E. 1999. "Nash equilibrium and welfare optimality" Review of Economic Studies, 66, 23-38.
 Minehart, D. and Z. Neeman. 2002. "Eective Siting of Waste Treatment Facilities." Journal of Environmental Economic and Management, 43, 303-324.
 Moulin, H. 2002. Axiomatic Cost and Surplus Sharing. Handbook of Social Choice and Welfare, Elsevier Science.
 Moulin, H. 2007. "Auctioning or assigning an object: some remarkable VCG mechanisms." mimeo, Rice University.
 O'Sullivan, A. 1993. "Voluntary Auctions for Noxious Facilities: Incentives to Participate and the Eciency of Siting Decisions." Journal of Environmental Economics and Management, 25, 12-26.
 Peleg, B. 1978. "Consistent voting systems." Econometrica, 46, 153-161.
 Perry M. and P. J. Reny. 1999."A general solution to King Solomon's dilemma." Games and Economic Behavior, 26(2), 279-285.