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  Experimental Social Planners: Good Natured, but Overly Optimistic

Engel, C., & Hippel, S. (2017). Experimental Social Planners: Good Natured, but Overly Optimistic.

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Item Permalink: http://hdl.handle.net/11858/00-001M-0000-002E-344A-2 Version Permalink: http://hdl.handle.net/11858/00-001M-0000-002E-3450-1
Genre: Paper

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 Creators:
Engel, Christoph1, Author              
Hippel, Svenja1, Author
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Public Good, Social Planner, Truthtelling, Experiment
 JEL: C91 - Laboratory, Individual Behavior
 JEL: D02 - Institutions: Design, Formation, Operations, and Impact
 JEL: D03 - Behavioral Microeconomics: Underlying Principles
 JEL: D61 - Allocative Efficiency; Cost–Benefit Analysis
 JEL: D62 - Externalities
 JEL: D64 - Altruism; Philanthropy
 JEL: H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
 JEL: K12 - Contract Law
 Abstract: Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the mechanism design literature into a public good experiment. Valuations for the good are heterogeneous. To each group we add a participant with power to impose a contribution scheme. We study four settings: the authority has no personal interest and (1) valuations are common knowledge or (2) active participants may misrepresent their types; the authority has a personal interest (3) and must decide before learning her own valuation or (4) knows her own valuation. Disinterested social planners predominantly choose a payment rule that gives every group member the same final payoff, even if misrepresentation is possible. Authorities are overly optimistic about truth telling. Interested social planners abuse their power, except if the opportunity cost of a more balanced rule is small.

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 Dates: 2017
 Publication Status: Published online
 Pages: -
 Publishing info: Bonn : Max Planck Institute for Research on Collective Goods
 Table of Contents: -
 Rev. Type: -
 Identifiers: Other: 2017/23
 Degree: -

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