An experimental comparison of collective choice procedures for excludable public goods

Abstract

This paper compares three collective choice procedures for the provision of excludable public goods under incomplete information. One, serial cost sharing (SCS), is budget balanced, individually rational, anonymous and strategy proof. The other two are “hybrid” procedures: voluntary cost sharing with proportional rebates (PCS) and with no rebates (NR). PCS satisfies all these properties except strategy proofness, and NR satisfies all the properties except for strategy proofness and budget balance. However, PCS and NR do not exclude any potential users, and they do not require equal cost shares, thereby overcoming the two main sources of inefficiency with SCS. We characterize the Bayesian Nash equilibria (BNE) of the hybrid mechanisms and conduct laboratory experiments to compare the performance of the three mechanisms. We find that PCS produces significantly more efficient allocations than either SCS or NR.