Abstract

Groves and others have shown that truthful answers concerning preferences for public goods can be elicited as dominant strategies if appropriate tax-subsidies rules are applied. This paper studies the statistical properties of the total revenues generated by one of the mechanisms with this desirable dominant strategy property. For particular specifications, it is shown that the expected total revenues increase like 4N. Further, if these revenues are rebated equally to the individuals in the model, then, although the dominant strategy property no longer obtains, the optimal responses converge to the truth in large economies. As a result, it can be shown that the mechanism with rebates will make the Pareto optimal decision with arbitrarily high probability, provided that the willingness to pay distribution is assumed to be symmetric.