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Development of an Incentive Compatible Mechanism to Assist in Environmental Remediation Site Pioritization and Allocation of Other Public GoodsEPA Grant Number: GF9500918
Title: Development of an Incentive Compatible Mechanism to Assist in Environmental Remediation Site Pioritization and Allocation of Other Public Goods
Investigators: Carson, Katherine S.
Institution: University of Colorado at Boulder
EPA Project Officer: Broadway, Virginia
Project Period: September 1, 1995 through January 1, 2000
Project Amount: $25,928
RFA: STAR Graduate Fellowships (1995) Recipients Lists
Research Category: Fellowship - Social Sciences , Economics and Decision Sciences , Academic Fellowships
The purpose of this study is to design a mechanism that can be applied to obtain information about the appropriate level of public good (e.g., level of environmental remediation), based upon sample data. The specific approach is to: 1) conduct an extensive survey of theoretical, experimental, and applied literature on the efficient allocation of public goods using incentive compatible and other mechanisms, 2) design a mechanism for the allocation of a discrete public good, 3) design a pilot experimental process to test the mechanism using undergraduate and/or graduate students (design parameters will include induced preferences, the payoffs to the participants, and the number of subjects involved), 4) test the mechanism and the process experimentally using a set of induced preferences to determine if the mechanism and process satisfy the design parameters, 5) test the mechanism using a related experimental design that can also be used to test a contingent valuation method, and 6) perform a theoretical econometric analysis to explore the tradeoff between the cost of a larger sample size and the related improved economic efficiency. The test results will be used to develop an incentive compatible mechanism for allocating public goods that performs as well or better than contingent valuation methods which are currently used in cost benefit analysis of environmental remediation projects. The goal is to design a mechanism that reduces or eliminates the problem with contingent valuation methods which give respondents an incentive to misrepresent their preferences and free ride upon the responses of others because environmental remediation projects are public goods.