Efficient and Stable Collective Choices under Crowding Preferences

• Authors: Jordi Massó.
• BSE Working Paper: 148 | September 15
• Keywords: Public Goods , Crowding Preferences , Subgame Perfect Implementation
• JEL codes: D62, D71, H41
• Public Goods
• Crowding Preferences
• Subgame Perfect Implementation

We consider a set of agents who have to choose one alternative among a finite set of social alternatives. A final allocation is a pair given by the selected alternative and the group of its users. Agents have crowding preferences over allocations: between any pair of allocations with the same alternative, they prefer the allocation with the largest number of users. We require that a decision be efficient and stable (which guarantees free participation in the group of users and free exit from it). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property. The social choice function implemented by the proposed mechanism is also anonymous and group stable.