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Strategy-proof allocation with outside option

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  • Zhang, Jun

Abstract

Strategy-proof mechanisms are widely used in market design. In an abstract allocation model in which outside options are available to agents, we prove two results that demonstrate the interplay between strategy-proofness and outside options. The two results treat deterministic allocation mechanisms and random allocation mechanisms in a unified way. The first result proves that, for individually rational and strategy-proof mechanisms, pinning down agents' probabilities of consuming outside options is equivalent to pinning down a mechanism. The second result presents a sufficient condition for two strategy-proof mechanisms to be welfare equivalent. We show the usefulness of the two results in several applications.

Suggested Citation

  • Zhang, Jun, 2023. "Strategy-proof allocation with outside option," Games and Economic Behavior, Elsevier, vol. 137(C), pages 50-67.
    • Handle: RePEc:eee:gamebe:v:137:y:2023:i:c:p:50-67
    DOI: 10.1016/j.geb.2022.11.004
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    References listed on IDEAS

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    Cited by:

    1. Mustafa Oğuz Afacan & Umut Dur, 2023. "Strategy‐proof size improvement: is it possible?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 321-338, April.

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    More about this item

    Keywords

    Strategy-proofness; Outside option; Market design; Random assignment;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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