Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70136
Authors: 
Güth, Werner
Koukoumelis, Anastasios
Levati, M. Vittoria
Ploner, Matteo
Year of Publication: 
2012
Series/Report no.: 
Jena Economic Research Papers 2012,034
Abstract: 
Based on an axiomatically derived provision rule allowing community members to endogenously determine which, if any, public project should be provided, we perform experiments where (i) not all parties benefit from provision, and (ii) the projects' costs can be negative. In the tradition of legal mechanism design, the proposed provision rule is widely applicable. Additionally, it relies on intuitive fairness and profitability requirements. Our results indicate that the provision rule is conducive to efficiency, despite its multiplicity of equilibria and underbidding incentives. The only condition is that the cost of the most efficient project is positive.
Subjects: 
Public project
Bidding behavior
Procedural fairness
JEL: 
C72
C92
D63
H44
Document Type: 
Working Paper

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