nep-des New Economics Papers
on Economic Design
Issue of 2018‒01‒15
five papers chosen by
Alex Teytelboym
University of Oxford

  1. A Pigouvian Approach to Congestion in Matching Markets By He, Yinghua; Magnac, Thierry
  2. Costly Concessions: An Empirical Framework for Matching with Imperfectly Transferable Utility By Galichon, Alfred; Kominers, Scott Duke; Weber, Simon
  3. Matching with myopic and farsighted players By HERINGS P. Jean-Jacques; MAULEON Ana; VANNETELBOSCH Vincent
  4. Constitutions and groups By MAULEON Ana; ROEHL Nils; VANNETELBOSCH Vincent
  5. Linear voting rules By Grüner, Hans Peter; Tröger, Thomas

  1. By: He, Yinghua; Magnac, Thierry
    Abstract: Matching markets often require recruiting agents "programs" to conduct a costly screening of "applicants", who are agents on the other side. A market becomes congested if programs must screen too many applicants. The cost associated with application submission is a Pigouvian tax that mitigates the negative externality that applicants impose on programs. A higher cost reduces congestion by discouraging applicants from applying to certain programs; however, match quality may be in jeopardy. We measure the effects of such Pigouvian taxes by studying variants of the Gale-Shapley Deferred-Acceptance mechanism with differential application costs. Using data collected in a multiple-elicitation experiment conducted in a real-life matching market, we show that a (low) application cost effectively reduces congestion without sacrificing matching quality.
    Keywords: Gale-Shapley Deferred Acceptance Mechanism; Costly Preference Formation; Screening; Stable Matching; Congestion; Matching Market Design
    JEL: C78 D50 D61 I21
    Date: 2017–12
  2. By: Galichon, Alfred; Kominers, Scott Duke; Weber, Simon
    Abstract: We introduce an empirical framework for models of matching with imperfectly transferable utility and unobserved heterogeneity in tastes. Our framework allows us to characterize matching equilibrium in a flexible way that includes as special cases the classical fully- and non-transferable utility models, collective models, and settings with taxes on transfers, deadweight losses, or risk aversion. We allow for the introduction of a general class of additive unobserved heterogeneity on agents' preferences. We show existence and uniqueness of an equilibrium under minimal assumptions. We then provide two algorithms to compute the equilibrium in our model. The first algorithm operates under any structure of heterogeneity in preferences; the second is more efficient, but applies only in the case in which random utilities are logit. We show that the log-likelihood of the model has a simple expression and we compute its derivatives. As an empirical illustration, we build a model of marriage with preferences over the partner type and private consumption, which we estimate on a British dataset.
    Keywords: Imperfectly Transferable Utility; Intrahousehold Allocation; Marriage Market; Matching; sorting
    JEL: C78 D3 J21 J23 J31 J4
    Date: 2017–11
  3. By: HERINGS P. Jean-Jacques (Universiteit Maastricht); MAULEON Ana (Université Saint-Louis, Bruxelles and CORE, UCL); VANNETELBOSCH Vincent (Université catholique de Louvain, CORE, Belgium)
    Abstract: We study stable sets for marriage problems under the assumption that players can be both myopic and farsighted. We introduce the new notion of the myopic-farsighted stable set, which is based on the notion of a myopic-farsighted improving path. A myopic-farsighted stable set is the set of match-ings such that there is no myopic-farsighted improving path from any match-ing in the set to another matching in the set (internal stability) and there is a myopic-farsighted improving path from any matching outside the set to some matching in the set (external stability). For the special cases where all players are myopic and where all players are farsighted, our concept pre-dicts the set of matchings in the core. When all men are myopic and the top choice of each man is a farsighted woman, we show that the singleton consist-ing of the woman-optimal stable matching is a myopic-farsighted stable set. The same result holds when all women are farsighted. We present examples where this is the unique myopic-farsighted stable set as well as examples of myopic-farsighted stable sets consisting of a core element di erent from the woman-optimal matching or even of a non-core element.
    Keywords: Marriage problems, stable sets, myopic and farsighted players.
    JEL: C70 C78
    Date: 2017–04–21
  4. By: MAULEON Ana (Université Saint-Louis Bruxelles and CORE); ROEHL Nils (University of Paderborn); VANNETELBOSCH Vincent (CORE, Université catholique de Louvain)
    Abstract: We develop a general theoretical framework that allows us to study the group structures that are going to emerge at equilibrium when individuals are allowed to engage in several groups at the same time. We introduce the notion of constitution in order to
    Keywords: overlapping coalitions, group structures, constitutions, stability, many-to-many matchings
    JEL: C72 C78 D85
    Date: 2017–08–31
  5. By: Grüner, Hans Peter; Tröger, Thomas
    Abstract: How should a society choose between two social alternatives if participation in the decision process is voluntary and costly and monetary transfers are not feasible? Considering symmetric voters with private valuations, we show that it is utilitarian-optimal to use a linear voting rule: votes get alternativedependent weights, and a default obtains if the weighted sum of votes stays below some threshold. Standard quorum rules are not optimal. We develop a perturbation method to characterize equilibria in the case of small participation costs and show that leaving participation voluntary increases welfare for linear rules that are optimal under compulsory participation.
    Keywords: Mechanisms design , optimal voting rules , costly voting , compulsory voting , quorum rules
    JEL: D71 D72 D82
    Date: 2018

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