Donor Coordination: Collective Distribution of Individual Contributions

With F. Brandt, D. Peters, C. Stricker, and W. Suksompong
Working paper

We propose a novel mechanism design setting in which each agent contributes some amount of a divisible resource (such as money or time) to a common pool. The agents then collectively decide how to efficiently distribute the resources over a fixed number of public goods called projects. An important application of this setting is donor coordination, which allows philanthropists with different goals to find mutually acceptable causes. In general, we find that no efficient mechanism can guarantee that each agent only needs to distribute her individual contribution over her most-preferred projects and that no efficient mechanism can incentivize agents to actually participate in the mechanism. On the other hand, for the important case of dichotomous preferences, these impossibilities disappear, and we show that the Nash product rule satisfies all of the above-mentioned properties. However, the Nash product can be strategically manipulated, and we settle a long-standing open question of Bogomolnaia, Moulin, and Stong (2005) by proving that no strategyproof and efficient mechanism can guarantee that at least one approved project of each agent receives a positive amount of the resource. An interesting alternative to the Nash product rule is the conditional utilitarian rule, which satisfies strategyproofness and a natural weakening of efficiency.