What Are People's Actual Utility Functions in Budget Aggregation?

Abstract: While participatory budgeting and budget-aggregation mechanisms require assumptions about how voters evaluate non-ideal budget allocations, little empirical evidence exists to validate which utility models accurately capture human preferences. We conducted structured polls with human participants to test whether real people's preferences conform to commonly assumed utility functions such as $\ell_1$, $\ell_2$ and Leontief. Our results suggest that these models may have limited explanatory power for actual behavior: most participants showed inconsistent patterns across different metric comparisons, and standard assumptions of project symmetry and sign symmetry -- core features of common distance-based metrics -- received little empirical support. However, we find encouraging evidence for more fundamental preference structures: a large majority of participants showed consistency with star-shaped preferences, as well as with peak-linear utility functions, where utility changes proportionally with distance from the ideal budget. These findings have important implications for designers of budget aggregation mechanisms. While theoretical results demonstrate impossibility results for standard distance metrics regarding truthfulness, Pareto-efficiency, and proportionality, our evidence suggests alternative modeling approaches may be warranted. More broadly, this work introduces a systematic methodology to empirically test the utility function assumptions that underpin budget aggregation theories, paving the way for more robust and realistic mechanism design.