This paper discusses a novel approach to elicit people’s preferences for public goods, namely the life satisfaction approach. Reported subjective well-being data are used to directly evaluate utility consequences of public goods. The strengths of this approach are compared to traditional approaches and identification issues are addressed. Moreover, it is applied to estimate utility losses cause...

While pollution reduction remains a common policy priority, no consensus exists on how best to stimulate needed action. This paper compares the effectiveness of relative and absolute performance standards in motivating emissions cleanup by stationary polluters. Using a unique panel characterizing Chilean pollution sources, I examine a natural experiment created by a change in the performance st...

A pricing mechanism for product evaluations can theoretically increase efficiency by voluntarily eliciting an evaluation that would otherwise not be provided. This paper uses a controlled laboratory experiment to test the performance of four market mechanisms to provide product evaluations: uniform price sealed bid, discriminatory price sealed bid, English clock, and Dutch clock auctions. Our r...

This paper studies the design of optimal utilitarian mechanisms for an excludable public good. Excludability provides a basis for making people pay for admissions; the payments can be used for redistribution and/or funding. Whereas previous work assumed that admissions are governed by the payment or nonpayment of a price, this paper allows for arbitrary admission rules. With su¢ cient inequalit...

In this paper, we consider a local public goods environment. The agents are faced with the task of providing local public goods that will benefit some or all of them. We propose a bidding mechanism whereby agents bid for the right to decide upon the organization of the economic activity. The subgame perfect equilibria of the mechanism generate efficient outcomes. We also show how to adapt the m...

How should a group of people decide to allocate a task that has to be done but is not adequately rewarded? This paper finds an optimal mechanism for the private provision of a public service in an environment without monetary transfers. All members of the group have the same cost of providing the service, but some individuals are better suited for the task than others. The optimal mechanism is ...

This paper intends to provide an evaluation of where the economic research on happiness stands and in which interesting directions it might develop. First, the current state of the research on happiness in economics is briefly discussed. We emphasize the potential of happiness research in testing competing theories of individual behavior. Second, the crucial issue of causality is taken up illus...

The fact that many people take it upon themselves to impose costly punishment on free riders helps to explain why collective action sometimes succeeds despite the prediction of received theory. But while individually imposed sanctions lead to higher contributions in public goods experiments, there is usually little or no net efficiency gain from them, because punishment is costly and at times m...

Recent results in mechanism design show that as long as agents have correlated private information and are sufficiently risk neutral, it is possible to design mechanisms that leave agents with arbitrarily small information rents. We show that these full-rent-extraction results hinge on the implicit assumption that the agents’ beliefs uniquely determine their preferences. We present an example o...

Bergstrom showed that a necessary condition for a Pareto optimum with non-paternalistic altruism is classification as a selfish Pareto optimum. This paper shows that Bergstrom’s result does not generalize to the benefit-cost analysis of generic changes in public goods. There may exist good projects that will be rejected by a selfish-benefit cost test, a selfish test error. Selfish test error is...