nep-des New Economics Papers
on Economic Design
Issue of 2021‒12‒13
six papers chosen by
Alex Teytelboym
University of Oxford

  1. Arrovian Efficiency and Auditability in Discrete Mechanism Design By Marek Pycia; M. Utku Ünver
  2. The Optimality of Upgrade Pricing By Dirk Bergemann; Alessandro Bonatti; Andreas Haupt; Alex Smolin
  3. Gradual College Admission * By Guillaume Haeringer; Vincent Iehlé
  4. Empirical Models of Non-transferable Utility Matching By Agarwal, Nikhil; Somaini, Paulo
  5. Matching In Closed Forms By Ulysse Lawogni
  6. Affirmative Action in Two Dimensions: A Multi-Period Apportionment Problem By Haydar Evren; Manshu Khanna

  1. By: Marek Pycia (University of Zurich); M. Utku Ünver (Boston College)
    Abstract: We study mechanism design and preference aggregation in environments in which the space of social alternatives is discrete and the preference domain is rich, as in standard models of social choice and so-called allocation without transfers. We show that a mechanism (or aggregation rule) selects the best outcome with respect to some resolute Arrovian social welfare function if, and only if, it is Pareto efficient and auditable. We further show that auditability implies non-bossiness and is implied by the conjunction of non-bossiness and individual strategy-proofness, and that the later conjunction is equivalent to group strategy-proofness as well as to Maskin monotonicity. As applications, we derive new characterizations in voting and allocation domains.
    Keywords: Strategy-proofness, Pareto efficiency, Arrovian preference aggregation, auditability, non-bossiness, voting, house allocation
    JEL: C78 D78
    Date: 2021–11–15
  2. By: Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT); Andreas Haupt (Institute for Data, Systems, and Society, MIT); Alex Smolin (Dept. of Economics, Yale University)
    Abstract: We consider a multiproduct monopoly pricing model. We provide sufficient conditions under which the optimal mechanism can be implemented via upgrade pricing—a menu of product bundles that are nested in the strong set order. Our approach exploits duality methods to identify conditions on the distribution of consumer types under which (a) each product is purchased by the same set of buyers as under separate monopoly pricing (though the transfers can be different), and (b) these sets are nested. We exhibit two distinct sets of sufficient conditions. The ï¬ rst set of conditions weakens the monotonicity requirement of types and virtual values but maintains a regularity assumption, i.e., that the product-by-product revenue curves are single-peaked. The second set of conditions establishes the optimality of upgrade pricing for type spaces with monotone marginal rates of substitution (MRS)—the relative preference ratios for any two products are monotone across types. The monotone MRS condition allows us to relax the earlier regularity assumption. Under both sets of conditions, we fully characterize the product bundles and prices that form the optimal upgrade pricing menu. Finally, we show that, if the consumer’s types are monotone, the seller can equivalently post a vector of single-item prices: upgrade pricing and separate pricing are equivalent.
    Keywords: Revenue Maximization, Mechanism design, Strong duality, Upgrade pricing
    JEL: D42 D82
    Date: 2021–07
  3. By: Guillaume Haeringer (Zicklin School of Business - Baruch College [CUNY] - CUNY - City University of New York [New York]); Vincent Iehlé (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)
    Abstract: We study multi-period college admission problems where, at each period, a matching is computed and students have the option to either finalize their matches or participate to the next period. Students participating to an additional run of the matching mechanism can submit a new rank order list to the matching clearinghouse. Such gradual matching systems can adequately account for an additional source of heterogeneity among participants, like withdrawals. We identify the conditions under which such systems first ensure that participating to additional runs of the matching mechanism is safe for participants (in the sense that they can secure the spot they obtained at the previous round) and second yield to stable matchings (with a stability concept adapted to this environment). We use our results to evaluate the former French college admission system, where students could finalize their matches at different dates up to two months ahead the end of the admission campaign.
    Keywords: French college admissions system,withdrawal,school choice problem,multi-period matching,early admission,stability,gradual matching,two-sided matching,JEL classification: C78,D02 gradual matching
    Date: 2021
  4. By: Agarwal, Nikhil (MIT); Somaini, Paulo (Stanford University)
    Abstract: Empirical models play a distinctive role in the study of matching markets. They provide a quantitative framework for measuring heterogeneity in preferences for schools (Hastings et al., 2009), comparing school assignment mechanisms (Abdulkadiroglu et al., 2017; Agarwal and Somaini, 2018; Calsamiglia et al., 2020), understanding preferences in the marriage market (Chiappori et al., 2012), and measuring the effects of market power in the medical residence match (Agarwal, 2015). The approach taken by these papers is based on first estimating the preferences of the agents in these markets and then using those estimates to make economic conclusions. This chapter provides a unified framework for analyzing agents’ preferences in empirical matching models with non-transferable utility. Our objective is to provide a roadmap of the existing literature and highlight avenues for future research.
    Date: 2021–08
  5. By: Ulysse Lawogni (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université)
    Abstract: In this paper, we consider an equally weighted bipartite matching market with transferability of the utility. We analyze the equilibrium of the market in the case of nearly full matching and in the case of nearly scarce matching. Considering a particular case of full matching with a quadratic specification and Gaussian distributions of the characteristics, we find entirely the analytical expression the optimal matching and of the individual surpluses gained by the partners from the sharing of the joint surplus at the equilibrium. We provide two ways to estimate the model.
    Date: 2021–11–24
  6. By: Haydar Evren; Manshu Khanna
    Abstract: In many settings affirmative action policies apply at two levels simultaneously, for instance, at university as well as at its departments. We show that commonly used methods in reserving positions for beneficiaries of affirmative action are often inadequate in such settings. We present a comprehensive evaluation of existing procedures to formally document their shortcomings. We propose a new solution with appealing theoretical properties and quantify the benefits of adopting it using recruitment advertisement data from India.
    Date: 2021–11

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