Efficient and Stable Collective Choices under Crowding Preferences

  • Authors: Jordi Massó.
  • BSE Working Paper: 112223 | September 15
  • Keywords: Public Goods , Crowding Preferences , Subgame Perfect Implementation
  • JEL codes: D62, D71, H41
  • Public Goods
  • Crowding Preferences
  • Subgame Perfect Implementation
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Abstract

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.

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