Incentive Compatible Allocation and Exchange of Discrete Resources
AbstractWe study the allocation and exchange of discrete resources--such as kidneys or school seats--in environments in which monetary transfers are not allowed. We introduce a new class of direct mechanisms that we call trading cycles, and show that a mechanism is group dominant-strategy incentive compatible and Pareto efficient if and only if it is equivalent to a trading-cycles mechanism. The class contains new mechanisms as well as such previously studied mechanisms as top trading cycles, serial dictatorships, and hierarchical exchange. In some problems, the new trading-cycles mechanisms perform better than all previously known mechanisms. Just as importantly, knowing that all group incentive-compatible and efficient mechanisms belong to our class allows us to easily determine which efficient outcomes can and cannot be achieved in a group incentive-compatible way.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 715.
Date of creation: 01 Jan 2009
Date of revision: 17 Nov 2011
Note: Previously circulated as "A Theory of House Allocation and Exchange Mechanisms"
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Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Web page: http://fmwww.bc.edu/EC/
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Mechanism design; group strategy-proofness; Pareto efficiency; matching; house allocation; house exchange; outside options;
Find related papers by JEL classification:
- 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-Making and Implementation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-24 (All new papers)
- NEP-CTA-2009-10-24 (Contract Theory & Applications)
- NEP-GTH-2009-10-24 (Game Theory)
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