AbstractThis paper considers a resource allocation mechanism that utilizes a profit-maximizing auctioneer/matchmaker in the Kelso-Crawford (1982) (many-to-one) assignment problem. We consider general and simple (individualized price) message spaces for firms' reports following Milgrom (2010). We show that in the simple message space, (i) the matchmaker's profit is always zero and an acceptable assignment is achieved in every Nash equilibrium, and (ii) the sets of stable assignments and strong Nash equilibria are equivalent. By contrast, in the general message space, the matchmaker may make a positive profit even in a strong Nash equilibrium. This shows that restricting message space not only reduces the information requirement but also improves resource allocation.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 721.
Date of creation: 28 Oct 2009
Date of revision: 23 Apr 2012
Publication status: published, Games and Economic Behavior
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two-sided matching problem; stable assignment; strong Nash equilibrium; coalition-proof Nash equilibrium; no-rent property; implementation theory;
Other versions of this item:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
- NEP-BEC-2009-11-07 (Business Economics)
- NEP-GTH-2009-11-07 (Game Theory)
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