Comments on “Pareto Improvements under Matching Mechanisms in a Public Good

Economy” by Larry Liu

Discussed by Yingying Lu Crawford School of Public Policy

November 4, 2013

Summary of the paper

• Matching game of voluntary provision of public good • Based on a two-stage game (Guttman , 1978, 1987), but focus

on the second stage • Aim: to evaluate matching equilibrium outcomes against Nash

equilibrium outcomes without matching • Results:

– Conditions where Pareto-improving equilibrium always exists

• Implications: – Wake up! No “Cinderella”! – Half a loaf is better than no bread!

My comments…

Results are visualized such that it is easy to understand.

? Is the finding also observable in the real world?

? Is it possible also to evaluate two matching equilibria in terms of Pareto improvement?

? Is it possible to generalize the results with general utility functions? (A minor point)