nep-des New Economics Papers
on Economic Design
Issue of 2019‒03‒11
seven papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. An Empirical Framework for Sequential Assignment: The Allocation of Deceased Donor Kidneys By Nikhil Agarwal; Itai Ashlagi; Michael A. Rees; Paulo J. Somaini; Daniel C. Waldinger
  2. Random Matching under Priorities: Stability and No Envy Concepts By Haris Aziz; Bettina Klaus
  3. Partial Ex-Post Verifiability and Unique Implementation of Social Choice Functions By Hitoshi Matsushima
  4. Manipulation of social choice functions under incomplete information By Michele Gori
  5. Identifying Bid Leakage In Procurement Auctions: Machine Learning Approach By Dmitry I. Ivanov; Alexander S. Nesterov
  6. Bid Costs and the (In)efficiency of Public Procurement Auctions By Blomgren-Hansen, Niels
  7. Analysis of Approval Voting in Poisson Games By François Durand; Antonin Macé; Matias Nunez

  1. By: Nikhil Agarwal; Itai Ashlagi; Michael A. Rees; Paulo J. Somaini; Daniel C. Waldinger
    Abstract: An organ transplant can improve a patient’s life while also realizing substantial savings in healthcare expenditures. Like many other scarce public resources, organs from deceased donors are rationed to patients on a waitlist via a sequential offer mechanism. The theoretical trade-offs in designing these rationing systems are not well understood and depend on agent preferences. This paper establishes an empirical framework for analyzing waitlist systems and applies it to study the allocation of deceased donor kidneys. We model the decision to accept an organ or wait for a more preferable organ as an optimal stopping problem, and develop techniques to compute equilibria of counterfactual mechanisms. Our estimates show that while some types of kidneys are desirable for all patients, there is substantial match-specific heterogeneity in values. We then evaluate alternative mechanisms by comparing their effect on patient welfare to an equivalent change in donor supply. Past reforms to the kidney waitlist primarily resulted in redistribution, with similar welfare and organ discard rates as the benchmark first come first served mechanism. These mechanisms and other commonly studied theoretical benchmarks remain far from optimal: we design a mechanism that increases patient welfare by the equivalent of a 14.2 percent increase in donor supply.
    JEL: C51 I10
    Date: 2019–02
  2. By: Haris Aziz; Bettina Klaus
    Abstract: We consider stability concepts for random matchings where agents have preferences over objects and objects have priorities for the agents. When matchings are deterministic, the standard stability concept also captures the fairness property of no (justified) envy. When matchings can be random, there are a number of natural stability / fairness concepts that coincide with stability / no envy whenever matchings are deterministic. We formalize known stability concepts for random matchings for a general setting that allows weak preferences and weak priorities, unacceptability, and an unequal number of agents and objects. We then present a clear taxonomy of the stability concepts and identify logical relations between them.Furthermore, we provide no envy / claims interpretations for some of the stability concepts that are based on a consumption process interpretation of random matchings. Finally, we present a transformation from the most general setting to the most restricted setting, and show how almost all our stability concepts are preserved by that transformation.
    Keywords: Matching Theory; Stability Concepts; Fairness; Random Matching
    JEL: C63 C70 C71 C78
    Date: 2017–07
  3. By: Hitoshi Matsushima (University of Tokyo)
    Abstract: This study investigates the unique implementation of a social choice function in iterative dominance in the ex-post term. We assume partial ex-post verifiability; that is, after determining an allocation, the central planner can only observe partial information about the state as verifiable. We demonstrate a condition of the state space, termed “full detection,†under which any social choice function is uniquely implementable even if the range of the players’ lies, which the ex-post verifiable information directly detects, is quite narrow. To prove this, we construct a dynamic mechanism according to which each player announces his (or her) private signal before the other players observe this signal at an earlier stage, and each player also announces the state at a later stage. In this construction, we can impose several severe restrictions, such as boundedness, permission of only tiny transfers off the equilibrium path, and no permission of transfers on the equilibrium path. This study does not assume either expected utility or quasi-linearity.
    Date: 2019–02
  4. By: Michele Gori
    Abstract: We introduce and study a new property for social choice functions, called PC-strategy-proofness, which is weaker than strategy-proofness. A social choice function is PC-strategy-proof if it cannot be manipulated by an individual whose information about the preferences of the other members of the society is limited to the knowledge, for every pair of alternatives, of the number of individuals preferring the first alternative to the second one. We prove that, when at least three alternatives are considered, there is no Pareto optimal, anonymous and PC-strategy-proof social choice function.
    Keywords: social choice function; manipulability; strategy-proofness; pairwise comparison; anonymity;Pareto optimality.
    JEL: D71 D72
    Date: 2019
  5. By: Dmitry I. Ivanov; Alexander S. Nesterov
    Abstract: We propose a novel machine-learning-based approach to detect bid leakage in first-price sealed-bid auctions. We extract and analyze the data on more than 1.4 million Russian procurement auctions between 2014 and 2018. As bid leakage in each particular auction is tacit, the direct classification is impossible. Instead, we reduce the problem of bid leakage detection to Positive-Unlabeled Classification. The key idea is to regard the losing participants as fair and the winners as possibly corrupted. This allows us to estimate the prior probability of bid leakage in the sample, as well as the posterior probability of bid leakage for each specific auction. We find that at least 16\% of auctions are exposed to bid leakage. Bid leakage is more likely in auctions with a higher reserve price, lower number of bidders and lower price fall, and where the winning bid is received in the last hour before the deadline.
    Date: 2019–03
  6. By: Blomgren-Hansen, Niels (Department of Economics, Copenhagen Business School)
    Abstract: The paper analyzes the excess entry hypothesis for sealed-bid first price public procurement auctions.The hypothesis is proved analytically for any feasible combination of bid preparation cost and bid evaluation cost when the bidders face a rectangular cost density function and confirmed in numerical simulations based on a family of flexible cost density functions. The excess entry hypothesis implies that the procurer may reduce both his own cost and the social cost by imposing a positive fee on the bids. Sequential search is a superior strategy to a public procurement auction whether or not the procurer imposes an optimal fee on the bids.
    Keywords: Excess entry; Public procurement auctions; Optimal fee; Sequential search
    JEL: D21 D43 D44 L13 L51
    Date: 2019–02–05
  7. By: François Durand (Nokia Bell Labs [Espoo], LINCS - Laboratory of Information, Network and Communication Sciences - Inria - Institut National de Recherche en Informatique et en Automatique - Institut Mines-Télécom [Paris] - Sorbonne Université); Antonin Macé (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - La plante et son environnement - CNRS - Centre National de la Recherche Scientifique - INA P-G - Institut National Agronomique Paris-Grignon - UP11 - Université Paris-Sud - Paris 11 - INRA - Institut National de la Recherche Agronomique); Matias Nunez (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We analyze Approval Voting in Poisson games endowing voters with private values over three candidates. We firsts how that any stable equilibrium is discriminatory: one candidate is commonly regarded as out of contention. We fully characterize stable equilibria and divide them into two classes. In direct equilibria, best responses depend only on ordinal preferences. In indirect equilibria, preference intensities matter. Counter-intuitively, any stable equilibrium violates the ordering conditions, a set of belief restrictions used to derive early results in the literature. We finally use Monte-Carlo simulations to estimate the prevalence of the different sorts of equilibria and their likelihood to elect a Condorcet winner.
    Keywords: Approval voting,Poisson games,Stable equilibria,Monte-Carlo simulations
    Date: 2019–03

This nep-des issue is ©2019 by Guillaume Haeringer and Alex Teytelboym. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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