Abstract
We conduct an experimental comparison of two well-known mechanisms for undertaking a binary public project: the pivotal mechanism and the voluntary contribution mechanism. We compare the two mechanisms under complete information in which each subject knows the other subjects’ payoffs. We then observe that the voluntary contribution mechanism works better than the pivotal mechanism from the perspectives of Pareto efficiency, individual rationality, and surplus maximization. On the other hand, there is no significant difference between the two mechanisms in terms of decision efficiency. These results suggest that the voluntary contribution mechanism is more favorable than the pivotal mechanism in practical applications.
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