Efficient sequential assignment with incomplete information
We study the welfare maximizing assignment of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially according to a Poisson or renewal process. There is a deadline after which no more objects can be allocated. We first show that the dynamically efficient allocation, characterized by Albright [Albright, S.C., 1974. Optimal sequential assignments with random arrival times. Manage. Sci. 21 (1), 60-67], is implementable by the dynamic version of VCG mechanism. We then obtain several properties of the welfare maximizing policy using stochastic dominance measures of increased variability and majorization arguments. We also propose redistribution mechanisms that 1) implement the efficient allocation, 2) satisfy individual rationality, 3) never run a budget deficit, 4) may run a budget surplus that vanishes asymptotically.
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- S. Christian Albright, 1974. "Optimal Sequential Assignments with Random Arrival Times," Management Science, INFORMS, vol. 21(1), pages 60-67, September.
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