nep-des New Economics Papers
on Economic Design
Issue of 2018‒02‒05
five papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Matching with Waiting Times: The German Entry-Level Labor Market for Lawyers By Dimakopoulos, Philipp D.; Heller, C.-Philipp
  2. Pairwise stable matching in large economies By Michael Greinecker; Christopher Kah
  3. Meetings and Mechanisms By Cai, Xiaoming; Gautier, Pieter A.; Wolthoff, Ronald
  4. On strategy-proofness and single-peakedness: median-voting over intervals By Protopapas, Panos
  5. Can Audits Backfire? Evidence from Public Procurement in Chile By Gerardino, Maria Paula; Litschig, Stephan; Pomeranz, Dina

  1. By: Dimakopoulos, Philipp D. (Humboldt University Berlin); Heller, C.-Philipp (Humboldt University Berlin)
    Abstract: We study the allocation of German lawyers to regional courts for legal trainee-ships. Because of excess demand in some regions lawyers often have to wait before being allocated. The currently used \"Berlin\" mechanism is not weakly Pareto efficient, does not eliminate justified envy and does not respect improvements. We introduce a mechanism based on the matching with contracts literature, using waiting time as the contractual term. The resulting mechanism is strategy-proof, weakly Pareto efficient, eliminates justified envy and respects improvements. We extend our proposed mechanism to allow for a more flexible allocation of positions over time.
    Keywords: many-to-one matching; matching with contracts; stability; slot-specific choice functions; waiting time; legal education;
    JEL: D82 C78 H75 I28
    Date: 2018–01–22
  2. By: Michael Greinecker; Christopher Kah
    Abstract: We formulate a general model and stability notion for two-sided pairwise matching problems with individually insignificant agents. Matchings are formulated as joint distributions over the characteristics of the populations to be matched. These characteristics can be high-dimensional and need not be included in compact spaces. Stable matchings exist with and without transfers and stable matchings correspond exactly to limits of stable matchings for finite agent models. We can embed existing continuum matching models and stability notions with transferable utility as special cases of our model and stability notion. In contrast to finite agent matching models, stable matchings exist under a general class of externalities. This might pave the way for integrating matching problems in other economic models.
    Keywords: Stable matching, economies in distributional form, large markets
    JEL: C62 C71 C78
    Date: 2018–02
  3. By: Cai, Xiaoming; Gautier, Pieter A.; Wolthoff, Ronald
    Abstract: We analyze a market in which sellers compete for heterogeneous buyers by posting mechanisms. A general meeting technology governs how buyers and sellers meet. We introduce a one-to-one transformation of this meeting technology that helps to clarify and extend many of the existing results in the literature, which has focused on two special cases: urn-ball and bilateral meetings. We show that the optimal mechanism for sellers is to post auctions combined with a reserve price equal to their own valuation and an appropriate fee (or subsidy) which is paid by (or to) all buyers meeting the seller. Even when there are externalities in the meeting process, the equilibrium is efficient. Finally, we analyze the sorting patterns between heterogeneous buyers and sellers and show under which conditions high-value sellers attract more high-value buyers in expectation.
    Keywords: competing mechanisms; matching function; meeting technology; search frictions
    JEL: C78 D44 D83
    Date: 2017–12
  4. By: Protopapas, Panos
    Abstract: We study solutions that choose an interval of alternatives when agents have single-peaked preferences. Similar to Klaus and Storcken (2002), we ordinally extend these preferences over intervals. Loosely speaking, we extend the results of Moulin (1980) to our setting and show that the results of Ching (1997) cannot always be similarly extended. Our main results are the following. First, strategy-proofness and peaks-onliness characterize the class of generalized median solutions. Second, although peaks-onliness cannot be replaced by the "weaker" property of continuity in our first result -as is the case in Ching (1997)- this equivalence is achieved when voter-sovereignty is also required. Finally, if preferences are symmetric and single-peaked, strategy-proofness and voter-sovereignty characterize the class of efficient generalized median solutions.
    Keywords: Social choice, strategy proofness, single peaked preferences, choice correspondences, voting, median solutions
    JEL: D71
    Date: 2018–01–15
  5. By: Gerardino, Maria Paula; Litschig, Stephan; Pomeranz, Dina
    Abstract: Audits are generally intended to monitor compliance with existing rules. However, audits can also create unintended effects and incentives through the specific protocol by which they are executed. In particular, audits can discourage the use of complex administrative procedures with more rules for auditors to check. This paper investigates the effects of procurement audits on public entities' choice of purchase procedures in Chile. While the national procurement legislation tries to promote the use of more transparent and competitive auctions rather than discretionary direct contracts for selection of suppliers, auctions are significantly more complex and the audit protocol mechanically leads to more scrutiny and a higher probability of further investigation for auctions than for direct contracts. Using a regression discontinuity design based on a scoring rule of the National Comptroller Agency, we find that audits lead to a decrease in the use of auctions and a corresponding increase in the use of direct contracts. In order to further test the underlying mechanism, we develop a new approach to conduct subgroup analysis in regression discontinuity designs while holding other observables constant.
    Date: 2017–12

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