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Give and Let Give: Alternative Mechanisms Based on Voluntary Contributions

Department of Management, Technology and Economics, ETH Zurich, 8092 Zurich, Switzerland
The author is indebted to Heinrich Nax for in-depth discussions and for introducing him to relevant literature.
Games 2019, 10(2), 21; https://doi.org/10.3390/g10020021
Received: 28 February 2019 / Revised: 24 April 2019 / Accepted: 30 April 2019 / Published: 7 May 2019
(This article belongs to the Special Issue Social Norm and Risk Attitudes)
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Abstract

We propose a new family of mechanisms, whereby players may give more or less directly to one another. A cornerstone case is the regular linear public goods mechanism (LPGM), where all contribute into a single common group account, the total amount of which is then distributed equally among players. We show that with sufficiently (yet not necessarily fully) pro-social preferences, the social optimum can be reached in Nash equilibrium in all social dilemma situations described by our mechanisms (including the LPGM). In addition, for a given heterogeneity of pro-social preferences, we help to identify which specific mechanisms perform best in terms of incentivizing giving. Our results are therefore relevant from two vantage points. One, they provide proper rational choice benchmarks based on Nash equilibrium under the assumption of other-regarding preferences. Two, they provide arguments in favor of re-structuring many collective action problems currently implemented as LPGMs when it is feasible to gain some information concerning who has concern for whom. View Full-Text
Keywords: voluntary contributions; pro-social preferences; mechanism design voluntary contributions; pro-social preferences; mechanism design
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Grech, P.D. Give and Let Give: Alternative Mechanisms Based on Voluntary Contributions. Games 2019, 10, 21.

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