The Efficient and Fair Approval of “Multiple-Cost–Single-Benefit” Projects Under Unilateral Information

Nava Kahanaa, Bar-Ilan University
Yosef Mealem, Netanya Academic College 
Shmuel Nitzan, Bar-Ilan University

Abstract. This paper focuses on indivisible multiple-cost–single-benefit projects that must be approved by the government. A simple mechanism is proposed that ensures an efficient and fair implementation of such projects. The proposed mechanism is appropriate for a unilateral information structure: the single beneficiary has complete information on the cost and benefit of the project while the government official has no such information and the cost bearers have information only on each other's costs.

JEL Codes: D61; D62; D78

Keywords: indivisible project; single beneficiary; multiple-cost bearers; unilateral information; efficient and fair implementation