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on Economic Design |
| By: | Bó, Inácio Guerberoff Lanari; Caspari, Gian; Khanna, Manshu |
| Abstract: | Priority-based allocation often requires eliminating justified envy, making serial dictatorship (SD) the only non-wasteful direct mechanism with that property. However, SD's outcomes can conflict with the policymaker's objectives. We introduce visible fairness, a framework where fairness is evaluated using coarser information. This is achieved by designing message spaces that strategically conceal information that could render desired allocations unfair. We characterize these mechanisms as generalizations of SD, establish conditions for strategy-proofness, and show how to implement distributional constraints. This creates a new trade-off: achieving distributional goals may require limiting preference elicitation, forgoing efficiency gains even when compatible with the constraints. |
| Keywords: | Matching Theory, Market Design, Indirect Mechanisms |
| JEL: | C78 D47 D78 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:328245 |
| By: | Pauline Corblet; Jeremy T. Fox; Alfred Galichon |
| Abstract: | We introduce a model of dynamic matching with transferable utility, extending the static model of Shapley and Shubik (1971). Forward-looking agents have individual states that evolve with current matches. Each period, a matching market with market-clearing prices takes place. We prove the existence of an equilibrium with time-varying distributions of agent types and show it is the solution to a social planner’s problem. We also prove that a stationary equilibrium exists. We introduce econometric shocks to account for unobserved heterogeneity in match formation. We propose two algorithms to compute a stationary equilibrium. We adapt both algorithms for estimation. We estimate a model of accumulation of job-specific human capital using data on Swedish engineers. |
| JEL: | C1 C78 J20 L10 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34352 |
| By: | Yao Cheng; Di Feng |
| Abstract: | We investigate Ekici (2024b)'s multi-center allocation problems, focusing on fairness in this context. We introduce three fairness notions that respect centers' priorities: internal fairness, external fairness, and procedural fairness. The first notion eliminates envy among agents within the same center, the second prohibits envy across different centers, and the third rules out envy from an ex-ante perspective through agents' trading opportunities. We provide two characterizations of a natural extension of the top-trading-cycles mechanism (TTC) through our fairness notions. Precisely, we show that in the presence of strategy-proofness and pair efficiency, internal fairness and external fairness together characterize TTC (Theorem 1). Also, strategy-proofness combined solely with procedural fairness also characterizes TTC (Theorem 2). Furthermore, by adding internal fairness, we establish our third TTC characterization, by relaxing Ekici's queuewise rationality to another voluntary participation condition, the center lower bound (Theorem 3). Finally, we define a core solution within this model and characterize it through TTC (Theorem 4). Our findings offer practical insights for market designers, particularly in contexts such as international cooperation in medical programs and worker exchange programs. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.21812 |
| By: | Ayumi Igarashi; Naoyuki Kamiyama; Yasushi Kawase; Warut Suksompong; Hanna Sumita; Yu Yokoi |
| Abstract: | We consider a classic many-to-one matching setting, where participants need to be assigned to teams based on the preferences of both sides. Unlike most of the matching literature, we aim to provide fairness not only to participants, but also to teams using concepts from the literature of fair division. We present a polynomial-time algorithm that computes an allocation satisfying team-justified envy-freeness up to one participant, participant-justified envy-freeness, balancedness, Pareto optimality, and group-strategyproofness for participants, even in the possible presence of ties. Our algorithm generalizes both the Gale-Shapley algorithm from two-sided matching as well as the round-robin algorithm from fair division. We also discuss how our algorithm can be extended to accommodate quotas and incomplete preferences. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.24111 |
| By: | Tejas Pagare; Agniv Bandyopadhyay; Sandeep Juneja |
| Abstract: | We study the problem of pure exploration in matching markets under uncertain preferences, where the goal is to identify a stable matching with confidence parameter $\delta$ and minimal sample complexity. Agents learn preferences via stochastic rewards, with expected values indicating preferences. This finds use in labor market platforms like Upwork, where firms and freelancers must be matched quickly despite noisy observations and no prior knowledge, in a stable manner that prevents dissatisfaction. We consider markets with unique stable matching and establish information-theoretic lower bounds on sample complexity for (1) one-sided learning, where one side of the market knows its true preferences, and (2) two-sided learning, where both sides are uncertain. We propose a computationally efficient algorithm and prove that it asymptotically ($\delta\to 0$) matches the lower bound to a constant for one-sided learning. Using the insights from the lower bound, we extend our algorithm to the two-sided learning setting and provide experimental results showing that it closely matches the lower bound on sample complexity. Finally, using a system of ODEs, we characterize the idealized fluid path that our algorithm chases. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.14466 |
| By: | Zuchanek, Kevin J. |
| Abstract: | This paper examines how translating school assignment information into parents' native languages affects school choice outcomes in Bremen, a city state in Germany, where a strategyincentivizing immediate acceptance mechanism is used. While translated information was made available to non-German-speaking families, the coverage did not extend to all commonly spoken languages. Leveraging administrative data, I employ a difference-in-differences approach that exploits exogenous variation from students whose language spoken at home is not included in these translations. The results show that the access to translated information about the assignment mechanism increases the likelihood of ranking and attending academic schools, as well as self-selection to schools with a more favourable composition, suggesting improved comprehension of the admission process. Effects are stronger for high-performing students, females, and students eligible for welfare benefits. This study contributes to the literature by showing that reducing information gaps through native-language provision can shape school choice behaviour and improve equitable access to centralized school admissions. |
| Abstract: | Diese Arbeit untersucht, wie die Übersetzung von Informationen zum Zuweisungsverfahren in die Herkunftssprachen der Eltern die Ergebnisse der Schulwahl in Bremen beeinflusst. Beim Übergang von der Primar- zur Sekundarschule wird ein Zuweisungsverfahren angewandt, das Anreize für strategisches Verhalten setzt. Während einigen Sprachgruppen Übersetzungen zur Verfügung gestellt wurden, umfasste die Abdeckung nicht alle gesprochenen Sprachen. Unter Verwendung administrativer Daten setzt die Arbeit einen Difference-in-Differences-Ansatz ein, der die exogene Variation ausnutzt, die sich aus Schüler*innen ergibt, deren Herkunftssprache nicht in diesen Übersetzungen berücksichtigt wurde. Die Ergebnisse zeigen, dass der Zugang zu übersetzten Informationen über das Zuweisungsverfahren die Wahrscheinlichkeit erhöht, Gymnasien gegenüber Oberschulen zu priorisieren und auch zu besuchen sowie Schulen mit einer günstigeren sozialen Zusammensetzung zu wählen, was auf ein verbessertes Verständnis des Aufnahmeprozesses hindeutet. Die Effekte sind stärker bei leistungsstarken Schüler*innen, Mädchen sowie bei Schüler*innen mit Anspruch auf Sozialleistungen. Diese Studie trägt zum wissenschaftlichen Diskurs bei, indem sie zeigt, dass der Abbau von Informationslücken durch die Bereitstellung von Informationen in unterschiedlichen Herkunftssprachen das Schulwahlverhalten beeinflussen und den chancengerechten Zugang zu zentralisierten Schulvergaben verbessern kann. |
| Keywords: | school choice, two-sided matching, immediate acceptance, information intervention |
| JEL: | I21 I24 C78 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:328238 |
| By: | Nathalie Gimenes; Tonghui Qi; Sorawoot Srisuma |
| Abstract: | How sellers choose reserve prices is central to auction theory, and the optimal reserve price depends on the seller's risk attitude. Numerous studies have found that observed reserve prices lie below the optimal level implied by risk-neutral sellers, while the theoretical literature suggests that risk-averse sellers can rationalize these empirical findings. In this paper, we develop an econometric model of ascending auctions with a risk-averse seller under independent private values. We provide primitive conditions for the identification of the Arrow-Pratt measures of risk aversion and an estimator for these measures that is consistent and converges in distribution to a normal distribution at the parametric rate under standard regularity conditions. A Monte Carlo study demonstrates good finite-sample performance of the estimator, and we illustrate the approach using data from foreclosure real estate auctions in S\~{a}o Paulo. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.19945 |
| By: | Hang Jiang |
| Abstract: | The first-order approach (FOA) is the standard tool for solving principal-agent problems, replacing the incentive compatibility (IC) constraint with its first-order condition to obtain a relaxed problem. We show that FOA is not a valid relaxation when the support of the outcome distribution shifts with the agent's effort, as in well-studied additive-noise models. In such cases, the optimal effort may occur at a kink point that the first-order condition cannot capture, causing FOA to miss optimal contracts, including widely adopted bonus schemes. Motivated by this limitation, we introduce the Implementation Relaxation Approach (IRA), which relaxes the set of agent actions and payoffs that feasible contracts can induce, rather than directly relaxing IC. IRA accommodates non-differentiable optima and is straightforward to apply across settings, particularly for deriving optimality conditions for simple contracts. Using IRA, we derive an optimality condition for quota-bonus contracts that is more general, encompassing a broader range of scenarios than FOA-based conditions, including those established in the literature under fixed-support assumptions. This also fills a gap where the optimality of quota-bonus contracts in shifting-support settings has been examined only under endogenous assumptions, and it highlights the broader applicability of IRA as a methodological tool. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.14766 |