Public Goods Provision Mechanisms and Reciprocity
This paper adapts public good provision mechanisms to the environment where agents are motivated by reciprocity. In a two-agent economy, we show that the standard pivot mechanism is not strategy-proof if agents care strongly enough about each other’s intentions. Truthful reporting maximises a player’s own payoff and hence is viewed as selfish by his opponent, who retaliates by underreporting demand for the public good. Incentive compatibility is restored if the mechanism is implemented sequentially. When agents are asked to report their valuations in turn, a high report by the first mover may result in him paying an unfairly large share of the provision cost, should the second mover underreport her demand. Hence, truthful reporting is not judged as selfish by the second mover, who reciprocates by stating her true demand. Our results alert the institutional designer to the importance of game dynamics when agents are non-selfish.

Please sign up for meetings using the below:
docs.google.com/spreadsheets/d/1lyNu-tHHJ15Se57I0BMvTVqYV0-Yxx6WShyLXVviqlg/edit#gid=0
Date: 16 November 2018, 14:00 (Friday, 6th week, Michaelmas 2018)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Maria Kozlovskaya (Aston University)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Melis Clark