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on Economic Design |
| By: | R. Pablo Arribillaga (CONICET/UNSL); Beatriz Millan (CONICET/UNSL/UNSJ); Eliana Pepa Risma (CONICET/UNSL) |
| Abstract: | In two-sided many-to-many matching markets under substitutable preferences —both with and without contracts— all stable-dominating mechanisms are manipulable. In light of this, we examine whether some of these mechanisms are at least not obviously manipulable (NOM). To this end, we discuss three established models that are encompassed by our general framework: the no-contract case, the unitary con tract case, and the multiple-contract case. Our results reveal fundamental differences among the three models. We transition from a no-contracts model, where all stable dominating mechanisms are NOM, to a multiple-contracts model, where all stable mechanisms and all efficient stable-dominating mechanisms are obviously manipulable (OM). In the intermediate case of unitary contracts the doctor-proposing DA mechanism remains NOM, but the hospital-proposing DA mechanism and all efficient stable-dominating mechanisms are OM. These findings reveal fundamental trade-offs between stability, efficiency, and NOM in these markets. |
| Keywords: | obvious manipulations, stability, efficiency, many-to-many matching, contracts. |
| JEL: | D71 D72 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:363 |
| By: | Ulrike Schmidt-Kraepelin; Warut Suksompong; Markus Utke |
| Abstract: | We study a budget aggregation setting where voters express their preferred allocation of a fixed budget over a set of alternatives, and a mechanism aggregates these preferences into a single output allocation. Motivated by scenarios in which the budget is not perfectly divisible, we depart from the prevailing literature by restricting the mechanism to output allocations that assign integral amounts. This seemingly minor deviation has significant implications for the existence of truthful mechanisms. Specifically, when voters can propose fractional allocations, we demonstrate that the Gibbard-Satterthwaite theorem can be extended to our setting. In contrast, when voters are restricted to integral ballots, we identify a class of truthful mechanisms by adapting moving-phantom mechanisms to our context. Moreover, we show that while a weak form of proportionality can be achieved alongside truthfulness, (stronger) proportionality notions derived from approval-based committee voting are incompatible with truthfulness. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.05708 |
| By: | Josue Ortega; Gabriel Ziegler; R. Pablo Arribillaga; Geng Zhao |
| Abstract: | The Deferred Acceptance (DA) algorithm is stable and strategy-proof, but can produce outcomes that are Pareto-inefficient for students, and thus several alternative mechanisms have been proposed to correct this inefficiency. However, we show that these mechanisms cannot correct DA's rank-inefficiency and inequality, because these shortcomings can arise even in cases where DA is Pareto-efficient. We also examine students' segregation in settings with advantaged and marginalized students. We prove that the demographic composition of every school is perfectly preserved under any Pareto-efficient mechanism that dominates DA, and consequently fully segregated schools under DA maintain their extreme homogeneity. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.11660 |
| By: | Wu, Shuping (Beijing Jiaotong University); Stevenson, Simon (Strome College of Business, Old Dominion University); Young, James (University of Oklahoma); Yang, Zan (Department of Real Estate and Construction Management, Royal Institute of Technology) |
| Abstract: | Urban land in China is state-owned and primarily allocated by the government via a two-stage auction process. Compared with auction mechanisms in other markets and countries, China’s two-stage land auctions have a unique structure in that the first stage is an open-bid survival auction with a fixed deadline. This paper uses bid history data for land auctions in Beijing to analyze jump bidding behavior, investigating its effects on subsequent bidding and the final sale price achieved. We find that jump bidding increases the likelihood that the next bid is also a jump bid and that it accelerates the bid submission process in the first stage. Furthermore, jump bidding generates two-way effects on the land price. While it prevents lower-value bidders from entering the second stage, it can also trigger a ‘jump war’ between higher-value bidders. The findings in this paper suggest alternative bidding strategies within the two-stage auction structure and also provide an auction-based behavioral explanation for urban land price dynamics in China. |
| Keywords: | land price; land auction structure; jump bidding; sniping; bid history data |
| JEL: | D44 L11 R32 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:kthrec:2025_005 |
| By: | Nicolas Eschenbaum; Nicolas Greber |
| Abstract: | We analyze the vulnerability of decentralized autonomous organizations (DAOs) to speculative exploitation via their redemption mechanisms. Studying a game-theoretic model of repeated auctions for governance shares with speculators, we characterize the conditions under which -- in equilibrium -- an exploitative exit is guaranteed to occur, occurs in expectation, or never occurs. We evaluate four redemption mechanisms and extend our model to include atomic exits, time delays, and DAO spending strategies. Our results highlight an inherent tension in DAO design: mechanisms intended to protect members from majority attacks can inadvertently create opportunities for costly speculative exploitation. We highlight governance mechanisms that can be used to prevent speculation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.21296 |
| By: | Pinaki Mandal |
| Abstract: | In the object reallocation problem, achieving Pareto-efficiency is desirable, but may be too demanding for implementation purposes. In contrast, pair-efficiency, which is the minimal efficiency requirement, is more suitable. Despite being a significant relaxation, however, pair-efficiency ensures Pareto-efficiency for any strategy-proof and individually rational rule when agents' preferences are unrestricted. What if agents' preferences have specific restricted structures, such as single-peakedness or single-dippedness? We often encounter such situations in real-world scenarios. This study aims to investigate whether pair-efficiency is sufficient to ensure Pareto-efficiency in such cases. Our main contribution in this paper is establishing the equivalence between pair-efficiency and Pareto-efficiency when dealing with single-peaked or single-dipped preference profiles. This equivalence holds without needing to assume any other properties of the rule. We further show that both the single-peaked domain and the single-dipped domain are the "maximal" domains where this equivalence holds. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.15169 |
| By: | H\'ector Hermida-Rivera; Toygar T. Kerman |
| Abstract: | This paper introduces a novel binary stability property for voting rules-called binary self-selectivity-by which a society considering whether to replace its voting rule using itself in pairwise elections will choose not to do so. In Theorem 1, we show that a neutral voting rule is binary self-selective if and only if it is universally self-selective. We then use this equivalence to show, in Corollary 1, that under the unrestricted strict preference domain, a unanimous and neutral voting rule is binary self-selective if and only if it is dictatorial. In Theorem 2 and Corollary 2, we show that whenever there is a strong Condorcet winner; a unanimous, neutral and anonymous voting rule is binary self-selective (or universally self-selective) if and only if it is the Condorcet voting rule. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.15265 |
| By: | Yi-Chun Chen; Zhengqing Gui |
| Abstract: | We apply marginal analysis \`a la Bulow and Roberts (1989) to characterize the revenue-maximizing selling mechanism for a multiproduct monopoly. Specifically, we derive the revenue change due to a price perturbation on any subset of bundles holding the prices of other bundles fixed. In an optimal mechanism, total revenue must not increase with any small price change for bundles with positive demand, nor with a small price decrease for bundles with zero demand. For any symmetric two-dimensional type distribution satisfying mild regularity conditions, the marginal analysis fully characterizes the optimal mechanism, whether the buyer's valuations are additive or exhibit complementarity or substitutability. For general type distributions, the analysis identifies which bundles must carry positive or zero demand and provides conditions under which randomization is necessary. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.06763 |
| By: | H\'ector Hermida-Rivera |
| Abstract: | In this paper, I introduce a novel stability axiom for stochastic voting rules, called self-equivalence, by which a society considering whether to replace its voting rule using itself will choose not do so. I then show that under the unrestricted strict preference domain, a voting rule satisfying the democratic principles of anonymity, optimality, monotonicity, and neutrality is self-equivalent if and only if it assigns to every voter equal probability of being a dictator (i.e., uniform random dictatorship). Thus, any society that desires stability and adheres to the aforementioned democratic principles is bound to either employ the uniform random dictatorship or decide whether to change its voting rule using a voting rule other than itself. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.15310 |
| By: | H\'ector Hermida-Rivera |
| Abstract: | In this paper, I characterize minimal stable voting rules and minimal self-stable constitutions (i.e., pairs of voting rules) for societies in which only power matters. To do so, I first let players' preference profiles over voting rules satisfy four natural axioms commonly used in the analysis of power: non-dominance, anonymity, null player and swing player. I then provide simple notions of minimal stability and minimal self-stability, and show that the families of minimal stable voting rules and minimal self-stable constitutions are fairly small. Finally, I conclude that political parties have evolved to ensure the minimal self-stability of otherwise not minimal self-stable constitutions. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.15323 |
| By: | Mohammad T. Hajiaghayi; Piotr Krysta; Mohammad Mahdavi; Suho Shin |
| Abstract: | We study the problem of delegated choice with inspection cost (DCIC), which is a variant of the delegated choice problem by Kleinberg and Kleinberg (EC'18) as well as an extension of the Pandora's box problem with nonobligatory inspection (PNOI) by Doval (JET'18). In our model, an agent may strategically misreport the proposed element's utility, unlike the standard delegated choice problem which assumes that the agent truthfully reports the utility for the proposed alternative. Thus, the principal needs to inspect the proposed element possibly along with other alternatives to maximize its own utility, given an exogenous cost of inspecting each element. Further, the delegation itself incurs a fixed cost, thus the principal can decide whether to delegate or not and inspect by herself. We show that DCIC indeed is a generalization of PNOI where the side information from a strategic agent is available at certain cost, implying its NP-hardness by Fu, Li, and Liu (STOC'23). We first consider a costless delegation setting in which the cost of delegation is free. We prove that the maximal mechanism over the pure delegation with a single inspection and an PNOI policy without delegation achieves a $3$-approximation for DCIC with costless delegation, which is further proven to be tight. These results hold even when the cost comes from an arbitrary monotone set function, and can be improved to a $2$-approximation if the cost of inspection is the same for every element. We extend these techniques by presenting a constant factor approximate mechanism for the general setting for rich class of instances. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.07162 |
| By: | Jos\'e Ignacio Rivero-Wildemauwe |
| Abstract: | Two agents trade an item in a simultaneous offer setting, where the exchange takes place if and only if the buyer's bid price weakly exceeds the seller's ask price. Each agent is randomly assigned the buyer or seller role. Both agents are characterized by a certain degree of Kantian morality, whereby they pick their bidding strategy behind a Veil of Ignorance, taking into account how the outcome would be affected if their trading partner adopted their strategy. I consider two variants with asymmetric information, respectively allowing buyers to have private information about their valuation or sellers to be privately informed about the item's quality. I show that when all trades are socially desirable, even the slightest degree of morality guarantees that the outcome is fully efficient. In turn, when quality is uncertain and some exchanges are socially undesirable, full efficiency is only achieved with sufficiently high moral standards. Moral concerns also ensure equal ex-ante treatment of the two agents in equilibrium. Finally, I show that if agents are altruistic rather than moral, inefficiencies persist even with a substantial degree of altruism. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.20551 |
| By: | Munetomo Ando; Minoru Kitahara |
| Abstract: | In the medical residency matching markets of the U.S. and Japan, we observe that an applicant's probability of matching with their first-listed program is disproportionately higher than that of matching with their second-listed program, given that they were rejected by the first. In contrast, the conditional probabilities of matching with lower-ranked programs are markedly lower and remain relatively stable. Furthermore, several experts have noted that participating programs sometimes exert pressure on applicants to manipulate the order of their rank-order lists. In this study, we show that this pressure can account for the observed probability pattern, considering the verifiability of being ranked first on the list. Using empirical data, we identify the prevalence of ranking pressure and quantify its impact on rank-order list changes and welfare under a simplified acceptance and pressure process. Additionally, we explore the implementation of a random permutation of the submitted rank-order list as a measure to counteract list reordering due to pressure. Our analysis shows that the benefits of this intervention outweigh the associated efficiency losses. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.08224 |
| By: | D. Carlos Akkar |
| Abstract: | A seller offers an asset in a decentralised market. Buyers have private signals about their common value. I study whether the market becomes allocatively more efficient with (i) more buyers, (ii) better-informed buyers. Both increase the information available about buyers' common value, but also the adverse selection each buyer faces. With more buyers, trade surplus eventually increases and converges to the full-information upper bound if and only if the likelihood ratios of buyers' signals are unbounded from above. Otherwise, it eventually decreases and converges to the no-information lower bound. With better information about trades buyers would have accepted, trade surplus increases. With better information about trades they would have rejected, trade surplus decreases--unless adverse selection is irrelevant. For binary signals, a sharper characterisation emerges: stronger good news increase total surplus, but stronger bad news eventually decrease it. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.06848 |