Incentives in Planning Procedures for the Provision of Public Goods

Roberts, John
April 1979
Review of Economic Studies;Apr79, Vol. 46 Issue 2, p283
Academic Journal
In this note we will be concerned with one aspect of this problem, namely, the specification of the pay-off functions in the context of planning procedures with public goods. The games we will consider will be non-cooperative ones in which the players are the agents (consumers) in the process and the strategy sets consist of messages the agents can send regarding what their preferences are. (These messages may, in fact, be complete preference orderings.) This much is more or less common to most studies of incentive questions. However, in many iterative planning procedures, a proposed allocation is generated at each iteration. This gives rise to a choice as to the pay-off functions in the game. On the one hand, one might hypothesize that agents will be concerned only with what they will finally receive. This leads to specifying the pay-off to each player as the utility to him under his true preferences of the final allocation selected. We will refer to the game with this pay-off as the global game. Alternatively, one might argue that it is more reasonable to suppose that agents simply try to do as well as they can for themselves at each iteration. This then leads to consideration of a separate game at each iteration, with the pay-offs being the change in the utilities associated with the adjustment of the proposed allocation. We call games with this pay-off local or instantaneous.


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