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on Economic Design |
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Issue of 2023‒05‒29
three papers chosen by Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford |
| By: | Andrew Kloosterman; Peter Troyan |
| Abstract: | We investigate whether preferences for objects received via a matching mechanism are influenced by how highly agents rank them in their reported rank order list. We hypothesize that all else equal, agents receive greater utility for the same object when they rank it higher. The addition of rankings-dependent utility implies that it may not be a dominant strategy to submit truthful preferences to a strategyproof mechanism, and that non-strategyproof mechanisms that give more agents objects they report as higher ranked may increase market welfare. We test these hypotheses with a matching experiment in a strategyproof mechanism, the random serial dictatorship, and a non-strategyproof mechanism, the Boston mechanism. A novel feature of our experimental design is that the objects allocated in the matching markets are real goods, which allows us to directly measure rankings-dependence by eliciting values for goods both inside and outside of the mechanism. Our experimental results confirm that the elicited differences in values do decrease for lower-ranked goods. We find no differences between the two mechanisms for the rates of truth-telling and the final welfare. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.03644&r=des |
| By: | Tatiana Daddario; Richard P. McLean; Andrew Postlewaite |
| Abstract: | In this paper, we take a mechanism design approach to optimal assignment problems with asymmetrically informed buyers. In addition, the surplus generated by an assignment of a buyer to a seller may be adversely affected by externalities generated by other assignments. The problem is complicated by several factors. Buyers know their own valuations and externality costs but do not know this same information for other buyers. Buyers also receive private signals correlated with the state and, consequently, the implementation problem exhibits interdependent valuations. This precludes a naive application of the VCG mechanism and to overcome this interdependency problem, we construct a two-stage mechanism. In the first stage, we exploit correlation in the firms signals about the state to induce truthful reporting of observed signals. Given that buyers are honest in stage 1, we then use a VCG-like mechanism in stage 2 that induces honest reporting of valuation and externality functions. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.01477&r=des |
| By: | Yasunori Okumura |
| Abstract: | We consider linear orders of finite alternatives that are constructed by aggregating the preferences of individuals. We focus on a linear order that is consistent with the collective preference relation, which is constructed by one of the supermajority rules and modified using two procedures if there exist some cycles. One modification procedure uses the transitive closure, and the other uses the Suzumura consistent closure. We derive two sets of linear orders that are consistent with the (modified) collective preference relations formed by any of the supermajority rules. These sets of linear orders are closely related to those obtained through Tideman's ranked pairs method and the Schulze method. Finally, we consider two social choice correspondences whose output is one of the sets introduced above, and show that the correspondences satisfy the four properties: the extended Condorcet principle, the Pareto principle, the independence of clones, and the reversal symmetry. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.09419&r=des |