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Incentives in the probabilistic serial mechanism

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  • Kojima, Fuhito
  • Manea, Mihai
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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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    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. Balinski, Michel & Sonmez, Tayfun, 1999. "A Tale of Two Mechanisms: Student Placement," Journal of Economic Theory, Elsevier, vol. 84(1), pages 73-94, January.
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    5. Pathak, Parag A. & Abdulkadiroglu, Atila & Roth, Alvin, 2005. "The New York City High School Match," Scholarly Articles 2562765, Harvard University Department of Economics.
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    12. Aldo Rustichini, 1992. "Convergence to Efficiency in a Simple Market with Incomplete Information," Discussion Papers 995, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    13. 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.
    14. Alvin E. Roth & Elliott Peranson, 1999. "The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design," NBER Working Papers 6963, National Bureau of Economic Research, Inc.
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    17. Manea, Mihai, 2009. "Asymptotic ordinal inefficiency of random serial dictatorship," Theoretical Economics, Econometric Society, vol. 4(2), June.
    18. Kojima, Fuhito, 2009. "Random assignment of multiple indivisible objects," Mathematical Social Sciences, Elsevier, vol. 57(1), pages 134-142, January.
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    Citations

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    Cited by:
    1. Kojima, Fuhito, 2013. "Efficient resource allocation under multi-unit demand," Games and Economic Behavior, Elsevier, vol. 82(C), pages 1-14.
    2. Jens L. Hougaard & Juan D. Moreno-Ternero & Lars P. Osterdal, 2014. "Assigning agents to a line," Working Papers 14.01, Universidad Pablo de Olavide, Department of Economics.
    3. 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.
    4. HOUGAARD, Jens L. & moreno-ternero, JUAN D. & OSTERDAL, Lars P., 2013. "Assigning agents to a line," CORE Discussion Papers 2013015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Yoichi Kasajima, 2013. "Probabilistic assignment of indivisible goods with single-peaked preferences," Social Choice and Welfare, Springer, vol. 41(1), pages 203-215, June.
    6. Mustafa Afacan, 2013. "The welfare effects of pre-arrangements in matching markets," Economic Theory, Springer, vol. 53(1), pages 139-151, May.
    7. Ünver, M. Utku & Kesten, Onur & Kurino, Morimitsu & Hashimoto, Tadashi & Hirata, Daisuke, 2014. "Two axiomatic approaches to the probabilistic serial mechanism," Theoretical Economics, Econometric Society, vol. 9(1), January.
    8. John William Hatfield & Fuhito Kojima & Yusuke Narita, 2012. "Promoting School Competition Through School Choice: A Market Design Approach," Discussion Papers 12-036, Stanford Institute for Economic Policy Research.

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