The Fragility of the Approval Mechanism for the Provision of Public Goods

We study theoretically and experimentally the approval mechanism (Masuda et al., 2013, 2014) inthe case of a three-player voluntary contribution game with the minimum disapproval benchmark.The three-player game raises the issue of aggregating approval votes. We compare the unanimityand the majority approval rules. Backwards elimination of weakly dominated strategies predicts nullcontributions under the majority rule and any contribution vector under the unanimity rule. Theexperimental results show that the approval mechanism is less efficient in three-player than in two-player voluntary contribution games. Furthermore, the unanimity rule is more effective at increasingcontributions than the majority rule. Overall, our results suggest that the efficiency of the AM ismitigated in the case of three-player public goods games