1998 Fiscal Year Final Research Report Summary
Toward a modelling of public goods provision : theory and experiment
| Project/Area Number |
08453001
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| Research Category |
Grant-in-Aid for Scientific Research (B)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
経済理論
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| Research Institution | Osaka University |
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Principal Investigator |
SAIJO Tatsuyoshi Osaka University, Institute of Social and Economic Research, Professr, 社会経済研究所, 教授 (20205628)
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| Co-Investigator(Kenkyū-buntansha) |
YAMATO Takehiko Tokyo Metropolitan University, Faculty of Economics, Associat Professr, 経済学部, 助教授 (90246778)
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| Project Period (FY) |
1996 – 1998
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| Keywords | the Provision of Public Goods / Voluntary Participation / the Free-Rider Problem / Spiteful Behavior / Voluntary Contribution Mechanism / Kyoto Protocol / Emissions Trading / International Public Goods |
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| Research Abstract |
It is not easy to attain a Pareto efficient allocation in an economy with public goods, because the provision of public goods has an incentive problem called the free-rider problem. However, Groves and Ledyard proposed a mechanism that achieves a Pareto efficient allocation under the Nash equilibrium concept in 1977. Subsequently, numerous mechanisms have been proposed that satisfy additional desirable properties.
In the previous mechanism design on public goods, it was implicitly assumed that no agents have a choice not to participate in the mechanism and that all agents are required to participate. In many practical circumstances such as international treaties, however, parties may have a choice not to participate in the mechanism proposed and hence some of them can free-ride on the benefit from a non-excludable public good provided by others.
We explicitly incorporate non-excludability and examine a model with voluntary participation such that each agent can decide whether she participates in the mechanism or not. Unfortunately, we prove an impossibility theorem that it is impossible to design a mechanism in which each agent has an incentive to participate. We conducted various experiments in both Japan and the United State to verify this theorem. In Japanese experiments, subjects who decided to participate took actions so as to punish subjects who did not participate, although the payoffs of participating subjects decreased. Non-participating subjects thus learned that non-participation was not beneficial to them and hence they began regularly participating. That is, it seemed that the source of cooperation was not altruism or kindness but was a payoff- maximizing response to the spiteful behavior of other subjects. On the other hand, American subjects behaved as the theory predicted, i.e., the American data support the evolutionarily stable equilibrium predictions. An open question is to analyze these significantly different behaviors across countries.
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