One of the problems with the Clarke tax mechanism is that when it is used, people have an incentive to lie about their preferences.

Question

Quizplus · Accepted Answer

The Clarke tax mechanism, also known as the pivotal mechanism, is designed to encourage truthful revelation of preferences by making individuals pay a tax equal to the harm they cause others if their vote changes the outcome. This discourages lying since the only time a participant pays is when their dishonesty would have altered the result, making truth-telling the dominant strategy.

One of the Problems with the Clarke Tax Mechanism Is