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Abstract

The probabilistic serial mechanism (Bogomolnaia and Moulin, 2001 [9]) is ordinally efficient but not strategy-proof. We study incentives in the probabilistic serial mechanism for large assignment problems. We establish that for a fixed set of object types and an agent with a given expected utility function, if there are sufficiently many copies of each object type, then reporting ordinal preferences truthfully is a weakly dominant strategy for the agent (regardless of the number of other agents and their preferences). The non-manipulability and the ordinal efficiency of the probabilistic serial mechanism support its implementation instead of random serial dictatorship in large assignment problems.

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File URL: http://www.sciencedirect.com/science/article/B6WJ3-4XBX7B3-1/2/2d49e70a1941f6d4468d793cedd3f722
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 1 (January)
Pages: 106-123

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:1:p:106-123

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Random assignment Probabilistic serial mechanism Ordinal efficiency Exact strategy-proofness in large markets Random serial dictatorship;

References

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1. Atila Abdulkadiroğlu & Parag A. Pathak & Alvin E. Roth, 2005. "The New York City High School Match," American Economic Review, American Economic Association, vol. 95(2), pages 364-367, May.
   
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    • Sönmez, Tayfun & Pathak, Parag A. & Abdulkadiroglu, Atila & Roth, Alvin, 2005. "The Boston Public School Match," Scholarly Articles 2562764, Harvard University Department of Economics.
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14. Balinski, Michel & Sonmez, Tayfun, 1999. "A Tale of Two Mechanisms: Student Placement," Journal of Economic Theory, Elsevier, vol. 84(1), pages 73-94, January.
15. Hylland, Aanund & Zeckhauser, Richard, 1979. "The Efficient Allocation of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 293-314, April.
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17. McLennan, Andrew, 2002. "Ordinal Efficiency and the Polyhedral Separating Hyperplane Theorem," Journal of Economic Theory, Elsevier, vol. 105(2), pages 435-449, August.
18. Manea, Mihai, 2009. "Asymptotic ordinal inefficiency of random serial dictatorship," Theoretical Economics, Econometric Society, vol. 4(2), June.
19. Fuhito Kojima & Parag A. Pathak, 2009. "Incentives and Stability in Large Two-Sided Matching Markets," American Economic Review, American Economic Association, vol. 99(3), pages 608-27, June.
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Cited by:

1. Onur Kesten & M. Utku Ünver, 2010. "A Theory of School-Choice Lotteries," Boston College Working Papers in Economics 737, Boston College Department of Economics, revised 29 Jun 2012.
2. Ünver, M. Utku & Kesten, Onur & Kurino, Morimitsu & Hashimoto, Tadashi & Hirata, Daisuke, 0. "Two axiomatic approaches to the probabilistic serial mechanism," Theoretical Economics, Econometric Society.
3. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2012. "Assigning agents to a line," Discussion Papers of Business and Economics 11/2012, Department of Business and Economics, University of Southern Denmark.

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