nep-des New Economics Papers
on Economic Design
Issue of 2022‒05‒30
five papers chosen by
Alex Teytelboym
University of Oxford

  2. Getting auctions for transportation capacity to roll By Frédéric Cherbonnier; David J. Salant; Karine van der Straeten
  3. Domains for Well Behaved Monotonic Social Choice Functions By Ramos, Paulo
  4. Scoring Rules, Ballot Truncation, and the Truncation Paradox By Eric Kamwa
  5. The Eurovision Song Contest: Voting Rules, Biases and Rationality By Victor Ginsburgh; Juan D. Moreno-Ternero

  1. By: Tierney, Ryan (Department of Economics)
    Abstract: We study the package assignment model and its consequences for the model of matching with transfers. We show that on rich domains, strategy-proofness, joint monotonicity (of Barberà, Berga, and Moreno [American Economic Review, 106 (2016)]), anonymity in welfare, and continuity in welfare together imply conditional efficiency: the allocation cannot be improved by re-allocation of packages, keeping packages intact. Thus, rules are restricted to choosing, for each problem, a set of objects to distribute and a partitioning of these. Labor markets are auctions with unit demand, once anonymity is modified to account for productivity differences. In this case, conditional efficiency is no blocking (by matched pairs), the core component of the standard solution concept of stability. Thus, while it is known that stable outcomes can be strategy-proof, we show that a component of stability is necessary for incentives. These results are derived from the following result, also discovered here, on the restricted quasilinear domain: weak pairwise strategy-proofness, anonymity in welfare, and continuity in welfare imply no-envy.
    Keywords: Assignment game; Package auctions; Strategy-proofness
    JEL: C78 D44 D47
    Date: 2022–04–22
  2. By: Frédéric Cherbonnier (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); David J. Salant; Karine van der Straeten (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)
    Abstract: An auction of transport capacity can only roll forward if competitive bidders show up at the start. To characterize bidding behavior, we develop a model with a single incumbent potentially in competition with a single challenger; should the challenger obtain slots, the two firms will engage post-auction in capacity con-strained price competition. We show how the auction structure, that is, whether the slots are auctioned one at a time, and if not, how they are packaged affects the outcome. Our key finding is that the division of the available slots into tranches can significantly affect the outcome of the auction. Absent any set-asides, a single auc-tion for all the slots will almost certainly be won by an incumbent. Set-asides can enable the challenger to win one or more packages of slots. Further, when the slots are split up, and auctioned one-at-a-time or in batches, a challenger's prospects improve significantly, and no longer rely only on set-asides. The implications of our analysis are (a) the outcome will depend crucially on auction design decisions,(b) set-asides for challengers can help and (c) an auction that results in successful entry by challengers may result in reduced auction revenues and industry profits.
    Keywords: Rail transportation,Open access,Auctions,Regulation
    Date: 2022–04–04
  3. By: Ramos, Paulo (Singapore Management University)
    Abstract: We present here a set of necessary and sufficient conditions for an MDConnected Domain to support a Well Behaved Monotonic Social Choice Function. We require the domain to have a minimal number of preferences in which a pair of alternatives flips their relation, and these reversals must occurr in accordance to a tree graph. While this condition cannot be summarized by a set of restrictions on individual preferences, we provide two alternative characterizations that can, one that is necessary and another that is sufficient.
    Date: 2022–02–01
  4. By: Eric Kamwa (LC2S - Laboratoire caribéen de sciences sociales - UA - Université des Antilles - CNRS - Centre National de la Recherche Scientifique)
    Abstract: A voting rule that permits some voters to favor a candidate by providing only the initial segment of their sincere rankings is said to be vulnerable to the truncation paradox. In this paper, we consider four models for counting truncated ballots, optimistic, pessimistic (the most common), averaged, and round-down. Under the impartial anonymous culture assumption, the choice of model generally has a real impact on truncation-paradox vulnerability, but there are exceptions. When the election is decided by a one-shot scoring rule, the optimistic model is invulnerable to the truncation paradox, but all other models are vulnerable. We identify new voting rules immune to the truncation paradox, such as the Modified Borda Count. To obtain a more complete picture of the impact of processing model, we assess the likelihood of the truncation paradox in three-candidate elections with large electorates, focusing not only on oneshot scoring rules but also scoring rules with one-by-one or below-average elimination. Our assessment confirms that the processing model for truncated ballots may really matter.
    Keywords: Truncation,Rankings,Scoring model,Probability,Paradox,Impartial and Anonymous Culture.
    Date: 2022–04–06
  5. By: Victor Ginsburgh; Juan D. Moreno-Ternero
    Abstract: We analyze and evaluate the rules and results at the 2021 Eurovision Song Contest. We first concentrate on the various voting procedures, and explore several alternatives (inspired by classical contributions in social choice and game theory) that could make a difference for the results. We also discuss other important issues, such as simplicity, contrast effects and whether experts are better judges than tele-voters. Our findings raise the question of whether the voting procedures used by the Eurovision Song Contest authorities are fail-safe. We endorse instead the use of the so-called Shapley voting procedure for judges as well as tele-voters.
    Keywords: Eurovision Song Contest, Voting, Borda, Shapley Method, Biases
    Date: 2022–05

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