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Efficient sequential assignment with incomplete information

  • Gershkov, Alex
  • Moldovanu, Benny

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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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 68 (2010)
Issue (Month): 1 (January)
Pages: 144-154

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Handle: RePEc:eee:gamebe:v:68:y:2010:i:1:p:144-154
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
  2. Susan Athey & Ilya Segal, 2007. "An Efficient Dynamic Mechanism," Levine's Bibliography 122247000000001134, UCLA Department of Economics.
  3. Dirk Bergemann & Juuso Välimäki, 2006. "Efficient Dynamic Auctions," Levine's Bibliography 321307000000000580, UCLA Department of Economics.
  4. Guo, Mingyu & Conitzer, Vincent, 2009. "Worst-case optimal redistribution of VCG payments in multi-unit auctions," Games and Economic Behavior, Elsevier, vol. 67(1), pages 69-98, September.
  5. S. Christian Albright, 1974. "Optimal Sequential Assignments with Random Arrival Times," Management Science, INFORMS, vol. 21(1), pages 60-67, September.
  6. Yokoo, Makoto & Sakurai, Yuko & Matsubara, Shigeo, 2004. "The effect of false-name bids in combinatorial auctions: new fraud in internet auctions," Games and Economic Behavior, Elsevier, vol. 46(1), pages 174-188, January.
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