To make high-quality research more accessible and easier to explore.

Fields:
3 results ✕ Clear filters

A Sequential Solution to the Public Goods Problem

Econometrica 1985 53(1), 77
[Much attention has been devoted recently to the problem of implementing an optimal provision of public goods with imperfect information about preferences. The literature studies mechanisms with individual agents directly revealing information about their preferences, and focuses on two types of truthful equilibria: dominant strategy and Bayesian-Nash. We introduce "Stackelberg" mechanisms with truth-telling a dominant strategy for all agents but the first. The first agent plays "before" the other maximizing his expected utility on the assumption that others will reveal their true preferences. We present sufficient conditions for the construction of Stacekelberg mechanisms which yield an efficient provision of public goods, balance the budget, and induce every participant to reveal their true preferences. These results strengthen and extend the known results of the Bayesian-Nash approach.]

Producer Incentives in Cost Allocation

Econometrica 1985 53(4), 757
[A general problem faced by both private firms and public enterprises is how to allocate the costs of common facilities fairly among the different goods and services produced. Any such cost accounting method can create incentives among product managers within the firm for altering the production function to their advantage. It is therefore both reasonable and desirable that a method reward increased efficientl by attributing lower unit costs to products whose marginal cost of production uniformly decreases. It is shown that there is only one "symmetric" method that satisfies this "monotonicity" principle--namely, the Aumann-Shapley price mechanism based on the Aumann-Shapley value for nonatomic games. This provides a new and simple axiomatization of this method without resorting to the usual assumption of additivity.]