Providing negative cost public projects under a fair mechanism: An experimental analysis

Werner Güth (), Anastasios Koukoumelis, Maria Levati and Matteo Ploner
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Anastasios Koukoumelis: Max Planck Institute of Economics, Strategic Interaction Group

No 2013-021, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: This paper experimentally examines a procedurally fair provision mech- anism allowing members of a small community to determine, via their bids, which of four alternative public projects to implement. Previous experi- ments with positive cost projects have demonstrated that the mechanism is efficiency enhancing. Our experiment tests whether the mechanism re- mains conducive to efficiency when negative cost, but less efficient, projects are made available. We find that this is not the case. On the other hand, we detect no significant difference in bid levels depending on whether mixed feelings are present or absent, and on whether the others' valuations are known or unknown.

Keywords: Public projects; Bidding behavior; Procedural fairness; Experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 D63 H44 (search for similar items in EconPapers)
Date: 2013-05-13
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-gth, nep-pbe and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2013-021

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