Analysis of Funding and Expenditure for Social Capital Enhancement : An Experimental Economics Approach

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We have two categories of results : experimental and theoretical researches. In experimental rescarch, we have four topics : (1) the competitive bidding system as a mean of expenditure for social capital accumulation. (2) cost sharing for public goods supplies, (3) inefficiency due to the 'commons' that is a specific feature of social capital, and (4) distributive justice in income distribution.In competitive bidding, we proved that the designated competitive bidding is inefficient in experiments. We also found the environments where the new limited competitive bidding system is effecient. One example is an outside bidder : once we include a bidder who cannot join the 'Dango, ' then the rest of the bidders tend not to talk to each other and the contract price becomes very close to the competitive price. In public goods experiments, we tested several artificial mechanisms such as the voluntary contribution mechanism, the pivotal mechanism, and the Walker mechanism. What we found are far from theoretical predictions. It is well known that the 'commons' is dissipated more rapidly than the Nash equilibrium predicts. We found two important theoretical principles giving rise to this result : share maximization and difference maximization. We also conducted positive analysis of income distribution, observing how subjects choose one of several normative principles.In theoretical research, we treated five topics : (1) the characterization of the voluntary contribution mechanism for financing public goods, (2) economically meaningful mechanism designs, (3) definition of the subjective distribution of a technological parameter that cannot be observed by a regulator, (4) fundamental theorems in welfare economics, and (5) decision making under bounded rationality. For further details, please see the summary section in the report of research results.