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Ordinal efficiency, fairness, and incentives in large markets


Liu, Qingmin; Pycia, Marek (2016). Ordinal efficiency, fairness, and incentives in large markets. SSRN 1872713, SSRN eLibrary.

Abstract

Efficiency and symmetric treatment of agents are the primary goals of resource allocation in environments without transfers. Focusing on ordinal mechanisms in which no small group of agents can substantially change the allocations of others, we show that all asymptotically efficient, symmetric, and asymptotically strategy-proof mechanisms lead to the same allocations in large markets. In particular, many mechanisms - both well-known and newly developed - are allocationally equivalent. This equivalence is consistent with prior empirical findings that different mechanisms lead to similar allocations in school choice. We also show that uniform randomizations over deterministic efficient mechanisms are asymptotically efficient.

Abstract

Efficiency and symmetric treatment of agents are the primary goals of resource allocation in environments without transfers. Focusing on ordinal mechanisms in which no small group of agents can substantially change the allocations of others, we show that all asymptotically efficient, symmetric, and asymptotically strategy-proof mechanisms lead to the same allocations in large markets. In particular, many mechanisms - both well-known and newly developed - are allocationally equivalent. This equivalence is consistent with prior empirical findings that different mechanisms lead to similar allocations in school choice. We also show that uniform randomizations over deterministic efficient mechanisms are asymptotically efficient.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C72, C78, D45
Language:English
Date:August 2016
Deposited On:03 Jul 2018 14:04
Last Modified:24 Mar 2020 11:43
Series Name:SSRN
Number of Pages:27
ISSN:1556-5068
OA Status:Green
Publisher DOI:https://doi.org/10.2139/ssrn.1872713
Official URL:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1872713

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