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on Economic Design |
| By: | Juan Pereyra; Li Chen; Min Zhu |
| Abstract: | Recent literature shows that dynamic matching mechanisms may outperform standard mechanisms in delivering desirable results. We highlight an under-explored design dimension: the time constraints that students face under such a dynamic mechanism. First, we theoretically explore the effect of time constraints and show that the outcome can be worse than the outcome produced by the student-proposing deferred acceptance mechanism. Second, we present evidence from Inner Mongolian university admissions, which indicates that time constraints can prevent dynamic mechanisms from achieving stable outcomes, thereby creating losers and winners among students. |
| Keywords: | Market Design, Dynamic Mechanism, Time-constrained, College Admissions |
| JEL: | C78 D47 D78 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mnt:wpaper:2509 |
| By: | Hiroki Shinozaki; Shigehiro Serizawa |
| Abstract: | We consider a package assignment problem with money, in which a finite set M of objects is allocated to agents. Each agent receives a package of objects and makes a payment, and has preferences over pairs consisting of a package and a payment. These preferences are not necessarily quasi-linear. The admissible set of object allocations is chosen by the planner to pursue specific objectives in conjunction with the rule. A rule satisfies constrained efficiency if no allocation―whose object allocation is admissible under the rule―Pareto dominates the allocation selected by the rule. We study the compatibility between constraints on admissible object allocations and desirable properties of rules, and characterize the rules that satisfy both. We establish that: A rule satisfies constrained efficiency, no wastage, equal treatment of equals, strategy-proofness, individual rationality, and no subsidy if and only if its admissible set of object allocations is bundling unit-demand for some partition of M, satisfies no wastage and anonymity, and the rule is a bundling unit-demand minimum price Walrasian rule. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1292 |
| By: | Qiushi Han; David Simchi-Levi; Renfei Tan; Zishuo Zhao |
| Abstract: | We study a sequential mechanism design problem in which a principal seeks to elicit truthful reports from multiple rational agents while starting with no prior knowledge of agents' beliefs. We introduce Distributionally Robust Adaptive Mechanism (DRAM), a general framework combining insights from both mechanism design and online learning to jointly address truthfulness and cost-optimality. Throughout the sequential game, the mechanism estimates agents' beliefs and iteratively updates a distributionally robust linear program with shrinking ambiguity sets to reduce payments while preserving truthfulness. Our mechanism guarantees truthful reporting with high probability while achieving $\tilde{O}(\sqrt{T})$ cumulative regret, and we establish a matching lower bound showing that no truthful adaptive mechanism can asymptotically do better. The framework generalizes to plug-in estimators, supporting structured priors and delayed feedback. To our knowledge, this is the first adaptive mechanism under general settings that maintains truthfulness and achieves optimal regret when incentive constraints are unknown and must be learned. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.21794 |
| By: | Georgalos, Konstantinos; Gonçalves, Ricardo; Ray, Indrajit; SenGupta, Sonali |
| Abstract: | This paper reports results from a laboratory experiment on a continuous Japanese-English auction in a common-value 'wallet game'. The main objective is to test whether bidders follow the equilibrium bidding strategy predicted by theory. We find systematic deviations from equilibrium behaviour: instead of bidding according to the Nash equilibrium, subjects appear to rely on expected value (EV) bidding. As a consequence, observed auction prices are higher than the theoretical benchmark, and the winner's curse occurs in a substantial fraction of auctions. We analyse bidding behaviour in detail and discuss the implications of our findings. |
| Keywords: | Japanese-English auction (JEA), Wallet game, Continuous bids, Winner’s curse, Expected value bidding |
| JEL: | C72 C91 C92 D63 D83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qmsrps:202601 |
| By: | Eric Gao |
| Abstract: | I study multidimensional sequential screening. A monopolist contracts with an agent endowed with private information about the distribution of their eventual valuations of different goods; a contract is written and the agent reports their initial private information before drawing and reporting their valuations. In these settings, the monopolist frontloads surplus extraction: Any information rents given to the agent to elicit their post-contractual valuations can be extracted in expectation before valuations are drawn. This significantly simplifies the multidimensional screening problem. If the agent's valuations satisfy invariant dependencies (valuations can be dependent across dimensions, but how valuations are coupled cannot vary in their initial private information), the optimal mechanism coincides with independently offering the optimal sequential screening mechanism for each good, regardless of the dependency structure. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.23274 |
| By: | Yeon-Koo Che |
| Abstract: | Classic market design theory is rooted in static models where all participants trade simultaneously. In contrast, modern platform-mediated digital markets are fundamentally dynamic, defined by the asynchronous and stochastic arrival of supply and demand. This chapter surveys recent work that brings market design to this dynamic setting. We focus on a methodological framework that transforms complex dynamic problems into tractable static programs by analyzing the long-run stationary distribution of the system. The survey explores how priority rules and information policy can be designed to clear markets and screen agents when monetary transfers are unavailable, and, when they are available, how queues of participants and goods can be managed to balance intertemporal mismatches of demand and supply and to spread competitive pressures across time. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.00155 |
| By: | Mark van Oldeniel; Christopher M. Snyder; Adriaan R. Soetevent |
| Abstract: | Our analysis of novel data from hundreds of thousands of online auctions on a large platform operating in the Netherlands uncovers a tendency to bid round numbers. Round winning bids are higher than average for a given item and are eschewed by bidders as they gain experience. These findings lead us to hypothesize that, rather than delivering a strategic benefit (say, adding salience to a jump bid), round bidding is a symptom of a behavioral bias. We construct a structural model of behavioral bidding in auctions, estimated for each of a subsample of the most frequently auctioned items. Our median estimate is that 21% of bidders are prone to round-number bias, reducing their expected surplus by nearly 10%. |
| JEL: | D44 D83 D91 L11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34564 |
| By: | Juan Pereyra; Tom Demeulemeester |
| Abstract: | We study the assignment of indivisible goods to individuals without monetary transfers. Previous literature has mainly focused on efficiency and individually fair assignments; consequently, egalitarian concerns have been overlooked. Drawing inspiration from the allocation of apartments in housing cooperatives—where families prioritize egalitarianism in assignments—we introduce the concept of Rawlsian assignment. We demonstrate the uniqueness, efficiency and anonymity of the Rawlsian rule. Our findings are validated using cooperative housing preference data, showing significant improvements in egalitarian outcomes over both the probabilistic serial rule and the currently employed rule. |
| Keywords: | random assignment, sd-efficiency, fairness, Rawls. |
| JEL: | C78 D63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:mnt:wpaper:2403 |
| By: | R. Pablo Arribillaga; Agustin G. Bonifacio |
| Abstract: | In problems involving the allocation of a single non-disposable commodity, we study rules defined on a general domain of preferences requiring only that each preference exhibit a unique global maximum. Our focus is on rules that satisfy a relaxed form of strategy-proofness, known as non-obvious manipulability. We show that the combination of efficiency and non-obvious manipulability leads to impossibility results, whereas weakening efficiency to unanimity gives rise to a large family of well-behaved non-obviously manipulable rules. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.15024 |
| By: | Chia-Hui Chen; Junichiro Ishida; Wing Suen |
| Abstract: | We consider a screening problem in which a data seller offers a dynamic payment schedule for a sequence of experiments to a privately informed buyer. Different buyer types face different expected costs for the same payment schedule. This payment gap can be optimized to reduce information rent. Dynamic mechanisms strictly increase seller revenue compared to the optimal static mechanism, and may even extract full surplus under some conditions. We obtain a full characterization of optimal dynamic mechanisms, which can take the simple form of a binary experiment at each stage. Payments are backloaded and experiments become progressively more informative over stages. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1294 |
| By: | Christopher Campos; Jesse Bruhn; Eric Chyn; Antonia Vazquez |
| Abstract: | Public school choice has evolved rapidly in the past two decades, as districts roll out new magnet, dual-language, and themed programs to broaden educational opportunity. We use newly collected national data to document that opt-in (voluntary) systems: (i) are the modal design; (ii) are harder to navigate; and (iii) have participation that is concentrated among more advantaged students. These facts suggest a striking inconsistency: districts have largely adopted centralized assignment algorithms to broaden access, but most rely on optional participation that fragments public education. We study the implications of this design choice in the Los Angeles Unified School District, the largest opt-in system in the country, combining nearly two decades of administrative data, randomized lotteries, and quasi-experimental expansions in access. Participation is highly selective, consistent with national evidence, and lottery estimates suggest that the students with the lowest demand for choice schools are the ones who gain the most from attending. Opt-in participation therefore embeds a selection mechanism that screens out high-return students and leaves many effective programs with unused capacity. To evaluate system-level implications, we estimate a structural model linking applications, enrollment, and achievement. Choice schools are vertically differentiated and generate meaningful gains, but the opt-in participation rule—through high application costs and negative selection on gains—prevents these benefits from reaching the students who need them most. Counterfactual simulations make the design stakes clear: information and travel-cost reductions have limited effects, whereas reforms that change the participation architecture eliminate core inefficiencies and deliver the largest district-wide achievement gains. These results underscore that system design— not school effectiveness alone—shapes who benefits from public school choice and to what extent. |
| JEL: | I0 I20 I24 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34581 |
| By: | Michele Fabi; Viraj Nadkarni; Leonardo Leone; Matheus X. V. Ferreira |
| Abstract: | We develop an axiomatic theory for Automated Market Makers (AMMs) in local energy sharing markets and analyze the Markov Perfect Equilibrium of the resulting economy with a Mean-Field Game. In this game, heterogeneous prosumers solve a Bellman equation to optimize energy consumption, storage, and exchanges. Our axioms identify a class of mechanisms with linear, Lipschitz continuous payment functions, where prices decrease with the aggregate supply-to-demand ratio of energy. We prove that implementing batch execution and concentrated liquidity allows standard design conditions from decentralized finance-quasi-concavity, monotonicity, and homotheticity-to construct AMMs that satisfy our axioms. The resulting AMMs are budget-balanced and achieve ex-ante efficiency, contrasting with the strategy-proof, expost optimal VCG mechanism. Since the AMM implements a Potential Game, we solve its equilibrium by first computing the social planner's optimum and then decentralizing the allocation. Numerical experiments using data from the Paris administrative region suggest that the prosumer community can achieve gains from trade up to 40% relative to the grid-only benchmark. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.24432 |
| By: | Yotam Gafni |
| Abstract: | Consider a social-choice function (SCF) is chosen to decide votes in a formal system, including votes to replace the voting method itself. Agents vote according to their ex-ante preference between the incumbent SCF and the suggested replacement. The existing SCF then aggregates the agents' votes and arrives at a decision of whether it should itself be replaced. An SCF is self-maintaining if it can not be replaced in such fashion by any other SCF. Our focus is on the implications of self-maintenance for centralization. We present results considering optimistic, pessimistic and i.i.d. approaches w.r.t. agent beliefs, and different tie-breaking rules. To highlight two of the results, (i) for the i.i.d. unbiased case with arbitrary tie-breaking, we prove an ``Arrow-Style'' Theorem for Dynamics: We show that only a dictatorship is self-maintaining, and any other SCF has a path of changes that arrives at a dictatorship. (ii) If we take into account wisdom of the crowd effects, for a society with a variable size of ruling elite, we demonstrate how the stable elite size is decreasing in both how extractive the economy is, and the quality of individual decision-making. All in all we provide a basic framework and body of results for centralization dynamics and stability, applicable for institution design, especially in formal ``De-Jure'' systems, such as Blockchain Decentralized Autonomous Organizations (DAOs). |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.22051 |
| By: | Sunghun Ko; Jinsuk Park |
| Abstract: | We study Arbitrum's Express Lane Auction (ELA), an ahead-of-time second-price auction that grants the winner an exclusive latency advantage for one minute. Building on a single-round model with risk-averse bidders, we propose a hypothesis that the value of priority access is discounted relative to risk-neutral valuation due to the difficulty of forecasting short-horizon volatility and bidders' risk aversion. We test these predictions using ELA bid records matched to high-frequency ETH prices and find that the result is consistent with the model. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.23386 |
| By: | Hervé Crès (Division of Social Science, New York University in Abu Dhabi, 129188, Abu Dhabi, UAE); Mich Tvede (School of Economics, University of Sheffield, Sheffield S10 2TU, UK) |
| Abstract: | Majority voting is widely observed to produce stable policy outcomes, despite theoretical predictions of instability in multidimensional policy spaces. The present paper shows that stability can arise because voters have non-ordered preferences. We model preferences as correspondences within d-dimensional policy spaces and introduce a geometric measure of orderedness based on the angular spread α of strictly preferred alternatives. Our main result is that majority equilibria exist provided α |
| Keywords: | ambiguity, centerpoint theorem, collective decision-making, Euclidean preferences, majority equilibrium, non-ordered preferences, status quo bias, voting |
| JEL: | C65 D71 D72 D81 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:shf:wpaper:2025010 |
| By: | Lagos, Francisco (University of Maryland at College Park); Saltmarsh, Jason (Old Dominion University); Liu, Jing (University of Maryland) |
| Abstract: | This study examines how centralized-admission school lotteries affect between-school racial and ethnic segregation in the largest U.S. public school districts. Using original nationwide panel data and a difference-in-differences design with staggered adoption, the research analyzes effects on school composition, intergroup exposure, and distribution evenness. The findings reveal that centralized-admission lotteries led to increased White student enrollment in district schools and modest improvements in intergroup exposure. Black-White exposure rose by 1.6 percentage points and student of color-White exposure by 1.8 points. However, White students experienced reduced exposure to all racial and ethnic groups, with similar patterns for Black, Asian, and other students of color. While centralized lotteries modestly redistribute students, they do not significantly reduce overall segregation, challenging assumptions about equity-promoting reforms. These results underscore the need for complementary policies including weighted lottery designs, transportation subsidies, and targeted adoption to address the structural roots of school segregation. |
| Keywords: | school choice, centralized-admission lotteries, school segregation, student assignment |
| JEL: | I24 I28 J15 H75 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18306 |