Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms
AbstractThe random priority (random serial dictatorship) mechanism is a common method for assigning objects to individuals. The mechanism is easy to implement and strategy-proof. However this mechanism is inefficient, as the agents may be made all better off by another mechanism that increases their chances of obtaining more preferred objects. Such an inefficiency is eliminated by the recent mechanism called probabilistic serial, but this mechanism is not strategy-proof. Thus, which mechanism to employ in practical applications has been an open question. This paper shows that these mechanisms become equivalent when the market becomes large. More specifically, given a set of object types, the random assignments in these mechanisms converge to each other as the number of copies of each object type approaches infinity. Thus, the inefficiency of the random priority mechanism becomes small in large markets. Our result gives some rationale for the common use of the random priority mechanism in practical problems such as student placement in public schools.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1677.
Length: 37 pages
Date of creation: Oct 2008
Date of revision:
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- Yeon-Koo Che & Fuhito Kojima, 2010. "Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms," Econometrica, Econometric Society, vol. 78(5), pages 1625-1672, 09.
- Yeon-Koo Che & Fuhito Kojima, 2008. "Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms," Discussion Papers 0809-06, Columbia University, Department of Economics.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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