Work

On a Mechanism that Improves Efficiency and Reduces Inequality in Voluntary Contribution Games

Year: 2022

Type: article

Abstract: We consider the class of linear voluntary contribution games under the general assumption of heterogeneous endowments. In this context, we assess the performance of the Galbraith Mechanism (GM) relative to a fixed equal sharing allocation in both theory and experiments. Three main empirical results emerge. First, the GM raises average contributions significantly above those under an equal-shares allocation. Second, the GM simultaneously reduces income inequality as it improves efficiency. Third, a player's contribution and allocation behaviour is sensitive to her position in the endowment distribution. In all their decision-making, agents consistently place greater emphasis on contribution levels when they are rich, and on contribution ratios (contributions relative to endowments) when they are poor.

Source: Games and Economic Behavior

DOI: 10.1016/j.geb.2025.01.011

Authors: Rod Falvey, Tom Lane, Shravan Luckraz

Institutions: Bond University, Newcastle University, University of Nottingham Ningbo China

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

SDG: Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $2,470