Explain for each of the three locations what decisions would be made using a Clark-Groves mechanism, how much each individual would pay and how much revenue would be raised towards the cost. To ease your calculations, you can use a calculator or a computing software such as Excel.

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Suppose the government is considering the provision of traffic lights at three different locations, denoted 1, 2 and ach
traffic light costs $600 to install. There are three individuals (A, B, and C). If a traffic light is installed all individuals will
be taxed equally to pay for the costs and this information is known to the individuals. The decision whether to install
each individual traffic light is taken on the basis of a majority vote; and, for each individual, if the individual's valuation
is greater than or equal to the cost to them then they would vote in favour of provision. The table below gives the
value that each individual places on installing a traffic light at each of the locations:
Location
Individual A
Individual B
Individual C
1
170
150
300
220
250
180
3
150
220
220
b. Explain for each of the three locations what decisions would be made using a Clark-Groves mechanism, how
much each individual would pay and how much revenue would be raised towards the cost. To ease your
calculations, you can use a calculator or a computing software such as Excel.
Transcribed Image Text:Suppose the government is considering the provision of traffic lights at three different locations, denoted 1, 2 and ach traffic light costs $600 to install. There are three individuals (A, B, and C). If a traffic light is installed all individuals will be taxed equally to pay for the costs and this information is known to the individuals. The decision whether to install each individual traffic light is taken on the basis of a majority vote; and, for each individual, if the individual's valuation is greater than or equal to the cost to them then they would vote in favour of provision. The table below gives the value that each individual places on installing a traffic light at each of the locations: Location Individual A Individual B Individual C 1 170 150 300 220 250 180 3 150 220 220 b. Explain for each of the three locations what decisions would be made using a Clark-Groves mechanism, how much each individual would pay and how much revenue would be raised towards the cost. To ease your calculations, you can use a calculator or a computing software such as Excel.
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