Advanced Search
MyIDEAS: Login to save this article or follow this journal

Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter

Contents:

Author Info

  • Yoon, Kiho

Abstract

We characterize the structure of optimal assignment rules when both allocative inefficiency and expenditure inefficiency (e.g., rent-seeking) are present. We find that the optimal structure critically depends on how the hazard rate of the value distribution behaves, and that it is often optimal to use probabilistic assignment rules so that the winner of the object is not always the one with the highest valuation. We also find that the inefficiency of the optimal assignment rule decreases as the variability of the value distribution increases.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0304406811000838
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 47 (2011)
Issue (Month): 6 ()
Pages: 670-676

as in new window
Handle: RePEc:eee:mateco:v:47:y:2011:i:6:p:670-676

Contact details of provider:
Web page: http://www.elsevier.com/locate/jmateco

Related research

Keywords: Mechanism; Random assignment; Winner-take-all assignment; Rank-order rules; Expenditure inefficiency;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Benny Moldovanu & Aner Sela & Xianwen Shi, 2007. "Contests for Status," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 115, pages 338-363.
  2. Daniele Condorelli, 2009. "What money can't buy: allocations with priority lists, lotteries and queues," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1482, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Hylland, Aanund & Zeckhauser, Richard, 1979. "The Efficient Allocation of Individuals to Positions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(2), pages 293-314, April.
  4. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 841-64, October.
  5. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5543, C.E.P.R. Discussion Papers.
  6. Suen, Wing, 1989. "Rationing and Rent Dissipation in the Presence of Heterogeneous Individuals," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(6), pages 1384-94, December.
  7. Erwin Amann & Wolfgang Leininger, 1995. "Expected revenue of all-pay and first-price sealed-bid auctions with affiliated signals," Journal of Economics, Springer, Springer, vol. 61(3), pages 273-279, October.
  8. Bogomolnaia, Anna & Moulin, Herve, 2001. "A New Solution to the Random Assignment Problem," Journal of Economic Theory, Elsevier, Elsevier, vol. 100(2), pages 295-328, October.
  9. Chakravarty, Surajeet & Kaplan, Todd R., 2006. "Optimal Allocation without Transfer Payments," MPRA Paper 18481, University Library of Munich, Germany, revised 02 Mar 2009.
  10. Bagnoli, M. & Bergstrom, T., 1989. "Log-Concave Probability And Its Applications," Papers, Michigan - Center for Research on Economic & Social Theory 89-23, Michigan - Center for Research on Economic & Social Theory.
  11. Winston Koh & Zhenlin Yang & Lijing Zhu, 2006. "Lottery Rather than Waiting-line Auction," Social Choice and Welfare, Springer, Springer, vol. 27(2), pages 289-310, October.
  12. Jerry R. Green & Nancy L. Stokey, 1982. "A Comparison of Tournaments and Contracts," NBER Working Papers 0840, National Bureau of Economic Research, Inc.
  13. Taylor, Grant A. & Tsui, Kevin K. K. & Zhu, Lijing, 2003. "Lottery or waiting-line auction?," Journal of Public Economics, Elsevier, Elsevier, vol. 87(5-6), pages 1313-1334, May.
  14. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 87(3), pages 355-74, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Kleiner, Andreas & Drexl, Moritz, 2013. "Why Voting? A Welfare Analysis," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 79886, Verein für Socialpolitik / German Economic Association.
  2. Condorelli, Daniele, 2012. "What money canʼt buy: Efficient mechanism design with costly signals," Games and Economic Behavior, Elsevier, Elsevier, vol. 75(2), pages 613-624.
  3. Kaplan, Todd R & Zamir, Shmuel, 2014. "Advances in Auctions," MPRA Paper 54656, University Library of Munich, Germany.
  4. Daniele Condorelli, 2009. "What money can't buy: allocations with priority lists, lotteries and queues," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1482, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Surajeet Chakravarty & Todd R. Kaplan, 2010. "Optimal Allocation without Transfer Payments," Discussion Papers, Exeter University, Department of Economics 1004, Exeter University, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:47:y:2011:i:6:p:670-676. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.