Experimental Tests of an Allocation Mechanism for Private, Public or Externality Goods

The results of eleven three-part experiments provide data on the performance of a voluntary, unanimity, bidding mechanism (EXTERN) for private, public and externality goods. The important feature of this mechanism is that all of its information requirements are endogenous. All of the private and externality good experiments reached unanimity agreement; nine of the public good experiments reached agreement. Measures of demand revelation tended to be lower for the private good than the public good. This tendency carried over into the private and public components of the externality experiments which lowered allocative efficiency.