Welfare Maximization Entices Participation

With F. Brandt and J. Hofbauer
Games and Economic Behavior, 14:308–314, 2019

We consider randomized public good mechanisms with optional participation. Preferences over lotteries are modeled using skew-symmetric bilinear (SSB) utility functions, a generalization of classic von Neumann-Morgenstern utility functions. We show that every welfare-maximizing mechanism entices participation and that the converse holds under additional assumptions. As a corollary, we obtain a characterization of an attractive randomized voting rule that satisfies Condorcet-consistency and entices participation. This stands in contrast to Moulin’s well-known no-show paradox (J. of Econ. Theory, 45, 53–64, 1988), which shows that no deterministic voting rule can satisfy both properties simultaneously.