Chapter 67 Incentive-compatible Mechanisms for Pure Public Goods: A Survey of Experimental Research

Abstract

Publisher Summary The presence of public goods seriously challenges traditional or “natural” solutions for the allocation of private goods. Important policy questions, of whether this chapter can rely on the market to provide optimal amounts of public goods such as air pollution, and how much we can rely on “natural” processes such as voluntary contribution to solve environmental problems, boil down to fundamental issues about human nature, i.e., about whether people are selfish or cooperative. Existing experiments on incentive-compatible mechanisms have focused on a few mechanisms. The data, combined with theoretical investigation, give us a fresh perspective on implementation among real people. For these mechanisms that have been studied in the laboratory, need more replications and robustness tests. Meanwhile, many mechanisms have never been tested in the laboratory. Equilibrium selection problem is almost untouched in this context. Therefore, more experiments should be conducted in this exciting field.