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Incentive compatible allocation and exchange of discrete resources


Pycia, Marek; Ünver, Utku (2017). Incentive compatible allocation and exchange of discrete resources. Theoretical Economics, 12(1):287-329.

Abstract

The allocation and exchange of discrete resources, such as transplant organs, public housing, dormitory rooms, and many other resources for which agents have single-unit demand, is often conducted via direct mechanisms without monetary transfers. Incentive compatibility and efficiency are primary concerns when designing such mechanisms. We construct the full class of group strategy-proof and Pareto efficient mechanisms and show that each of them can be implemented by endowing agents with control rights over resources. This new class, which we call trading cycles, contains new mechanisms as well as known mechanisms such as top trading cycles, serial dictatorships, and hierarchical exchange. We illustrate how one can use our construction to show what can and what cannot be achieved in a variety of allocation and exchange problems, and we provide an example in which the new trading-cycles mechanisms are more Lorenz equitable than all previously known mechanisms.

Abstract

The allocation and exchange of discrete resources, such as transplant organs, public housing, dormitory rooms, and many other resources for which agents have single-unit demand, is often conducted via direct mechanisms without monetary transfers. Incentive compatibility and efficiency are primary concerns when designing such mechanisms. We construct the full class of group strategy-proof and Pareto efficient mechanisms and show that each of them can be implemented by endowing agents with control rights over resources. This new class, which we call trading cycles, contains new mechanisms as well as known mechanisms such as top trading cycles, serial dictatorships, and hierarchical exchange. We illustrate how one can use our construction to show what can and what cannot be achieved in a variety of allocation and exchange problems, and we provide an example in which the new trading-cycles mechanisms are more Lorenz equitable than all previously known mechanisms.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Group strategy-proofness, pareto efficiency, matching, no-transfer allocation and exchange, single-unit demand
Language:English
Date:January 2017
Deposited On:09 Feb 2018 09:54
Last Modified:19 Feb 2018 11:00
Publisher:Society for Economic Theory
ISSN:1555-7561
OA Status:Gold
Free access at:Official URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.3982/TE2201
Official URL:https://econtheory.org/ojs/index.php/te/article/view/20170287

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