Incentives and Public Inputs*
نویسنده
چکیده
The problem of incentives has arisen in a number of economic contexts, including most recently as a general issue in the design and analysis of resource allocation mechanisms [c.f. Hurwicz (1973)]. Most simply, the incentive problem concerns the rationale there is (or can be provided) for economic agents to follow prescribed rules of behavior designed to achieve some objective, usually an efficient or optimal allocation of resources. Typically the prescribed behavioral rules are some type of competitive market behavior such as, the communication of one’s (net) demand for goods at prices that are announced by a central agent, e.g., a central planning bureau, market custodian, or auctioneer. The incentive problem concerns whether or not it is in an agent’s interest to behave according to these rules and truthfully reveal his demand. Although it has been shown by Hurwicz (1972) that even in the most classical, no externality, private goods context it is typically in an agent’s interest to violate the rules, the incentive problem is most familiar to economists as it arises with reference to public goods. Furthermore, it appears widely believed that no mechanism can be devised to optimally allocate public goods that avoids the incentive problem. The reason for this belief is easy to see.
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