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The pivotal mechanism revisited: some evidence on group manipulation

Published online by Cambridge University Press:  14 March 2025

Francesco Feri ,
Anita Gantner ,
Wolfgang Höchtl  and
Rupert Sausgruber
Francesco Feri
Affiliation:
University of Trieste, Trieste, Italy
Anita Gantner*
Affiliation:
University of Innsbruck, Universitätsstr. 15, 6020 Innsbruck, Austria
Wolfgang Höchtl
Affiliation:
Austrian National Bank, Vienna, Austria
Rupert Sausgruber
Affiliation:
University of Innsbruck, Universitätsstr. 15, 6020 Innsbruck, Austria
*
[email protected]
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Abstract

This paper studies the vulnerability of the pivotal mechanism with respect to manipulation by groups. In a lab experiment, groups decide on the implementation of various alternatives, some of which imply opposite interests for the two subgroups. We investigate the occurrence of tacit and explicit collusion by allowing for communication within subgroups in one treatment and prohibiting it in another. Even though all agents’ preferences are common knowledge and there exists a simple symmetric collusive strategy for one subgroup, we find little evidence for tacit collusion. Only when explicit communication is allowed, collusion is established. A behavioral model using quantal response equilibrium in which subjects have beliefs over the correlation of errors of same-type subjects helps explain the main features of our data.

Keywords

Collective decision makingPivotal mechanismCollusionCommunicationQRE

JEL classification

C92: Laboratory, Group Behavior D61: Allocative Efficiency • Cost–Benefit Analysis D71: Social Choice • Clubs • Committees • Associations
Type
Article
Information
Experimental Economics , Volume 16 , Issue 1: Mechanisms and Methodology , March 2013 , pp. 23 - 51
Copyright
Copyright © 2012 Economic Science Association

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Footnotes

We gratefully acknowledge financial support by the Austrian Science Fund (FWF) through Project No. S10307-G14 and by the University of Innsbruck though grant “Nachwuchsförderung”. We wish to thank two anonymous referees and an editor for their helpful suggestions, and Karl Seiringer for excellent research assistance.

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