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A mechanism requesting prices and quantities may increase the provision of heterogeneous public goods

Published online by Cambridge University Press:  14 March 2025

Federica Alberti  and
César Mantilla Open the ORCID record for César Mantilla [Opens in a new window]
Federica Alberti
Affiliation:
Faculty of Business and Law, University of Portsmouth, Portsmouth, UK
César Mantilla*
Affiliation:
Department of Economics, Universidad del Rosario, Calle 12C # 4-69 Bogotá, Colombia
*
cesar.mantilla@urosario.edu.co
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Abstract

We study the provision problem of an asymmetrically valued public project using a novel mechanism proposed by Van Essen and Walker (2017). Under this mechanism, each player simultaneously submits a price (either a contribution or a requested compensation) and a desired project quantity. In our context, two non-hosts interact with the project’s host, who gets harmed by provision. The minimum submitted quantity is provided if the contributions are sufficient to cover the building costs and the host’s requested compensation. We test the efficiency-enhancing effects of communication and find that, although it led to larger provided quantities, the probability of provision is unaffected, and the non-hosts kept most of the efficiency surplus. Moreover, the effect of communication disappears in settings where the host demands a larger compensation in equilibrium. The coding of chat logs reveals that veto threats are rare (1%), although the mechanism allows to do so. Reaching non-binding agreements and the host’s engagement with communication are positively correlated with the probability of provision.

Keywords

NIMBYLULUPublic goods provision

JEL classification

Q58: Government Policy H4: Publicly Provided Goods C92: Laboratory, Group Behavior

Information

Type
Original Paper
Information
Experimental Economics , Volume 27 , Issue 1: Special Issue in Honor of John H. Kagel , March 2024 , pp. 244 - 270
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2023

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Footnotes

The data, code, and instructions can be found in the online repository https://osf.io/c6v4w/. The study was funded through the University of Portsmouth, Faculty of Business and Law Research Project Fund and the program “Inclusión productiva y social: programas y políticas para la promoción de una economía formal, código 60185, que conforma la Alianza EFI, bajo el Contrato de Recuperación Contingente No. FP44842-220-2018.” We gratefully acknowledge the research assistance provided by Steffanny Romero, Silvia Ortíz, Sofia Almeida, and Andrés Zambrano, as well as the comments received in the BEBES-Seminar. We are also very thankful with the Editors of the special issue and the anonymous reviewers for their comments.

A correction to this article is available online at https://doi.org/10.1007/s10683-023-09807-9.

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