Pareto Improvements under Matching Mechanisms in a Public Good Economy (discussant slides)
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Transcript of Pareto Improvements under Matching Mechanisms in a Public Good Economy (discussant slides)
Comments on “Pareto Improvements under Matching Mechanisms in a Public Good
Economy” by Larry Liu
Discussed by Yingying Lu Crawford School of Public Policy
November 4, 2013
Summary of the paper
• Matching game of voluntary provision of public good • Based on a two-stage game (Guttman , 1978, 1987), but focus
on the second stage • Aim: to evaluate matching equilibrium outcomes against Nash
equilibrium outcomes without matching • Results:
– Conditions where Pareto-improving equilibrium always exists
• Implications: – Wake up! No “Cinderella”! – Half a loaf is better than no bread!
My comments…
Results are visualized such that it is easy to understand.
? Is the finding also observable in the real world?
? Is it possible also to evaluate two matching equilibria in terms of Pareto improvement?
? Is it possible to generalize the results with general utility functions? (A minor point)