A Groves mechanism
A) Is a procedure for setting the level of the private good that induces everyone to report their preferences correctly
B) Produces a socially inefficient outcome
C) Is a procedure for setting the level of the public good that induces everyone to report their preferences incorrectly
D) Is a procedure for setting the level of the public good that induces everyone to report their preferences correctly

Question

Quizplus · Accepted Answer

A Groves mechanism is a procedure for setting the level of the public good that induces everyone to report their preferences correctly. It incentivizes truthful reporting by making it individually rational for each person to report their true preferences, and the mechanism then determines the public good level based on these reported preferences. This helps to achieve a socially optimal outcome.

A Groves Mechanism