Question
Consider the following mechanism as a solution to the public goods problem. The public good, G, is discrete (if it is provided it must be
Consider the following mechanism as a solution to the public goods problem. The public good, G, is discrete (if it is provided it must be provided at G = 1). There are two agents i = 1; 2 who have well-defined reservation prices for the public good r i which are not known by the government. c is the cost of providing the public good and s i is agent i's cost share such that s 1 + s 2 = 1. Each agent reports a net valuation for the public good b i . Each agent believes that if and only if b 1 + b 2 >=0 the public good will be provided. Would you expect this mechanism to yield truthful revelation of preferences? Explain.
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