SFB 303 Discussion Paper No. A - 559
Author: Chen, Yan
Title: Supermodularity of Nash-Efficient Public Good Mechanisms
Abstract: We present a new family of mechanisms which implement Lindahl
allocations in Nash equilibrium in a general environment. In a
quasilinear environment the new family of mechanisms are supermodular
games with suitable choice of parameters, which implies that they
converge under a wide class of learning dynamics, including Bayesian
learning, adaptive learning, fictitious play and many others. Among the
existing public goods mechanisms whose Nash equilibria are Pareto
efficient, we find that the Groves-Ledyard mechanism is a supermodular
game when the punishment parameter is sufficiently high, while none of
the existing game forms which implements Lindahl allocation is
supermodular. This provides a theoretical explanation for the
experimental findings on the dynamic stability of public goods
mechanisms in Chen and Plott (1996) and Chen and Tang (1996).
Keywords: public goods mechanisms, supermodular games
JEL-Classification-Number: H41, C62, D83
Creation-Date: October 1997
Unfortunately this paper is not available online. Please contact us to order a hardcopy.
SFB 303 Homepage
05.05.1998, Webmaster