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Cardinal Bayesian allocation mechanisms without transfers

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  • Miralles, Antonio

Abstract

In allocating goods with no use of monetary transfers, random allocation mechanisms can be designed in order to elicit information on preference intensities. I study the nontransfer allocation of two ex-ante identical objects under Bayesian incentive compatibility, with symmetric agents and independent private valuations. I find the ex-ante utilitarian-optimal mechanism, in which the probability of receiving a specified object is used as “numeraire” to purchase probability units of the other object. I characterize this mechanism as an appropriate combination of lotteries, auctions and insurance. The latter element ensures that efficient auctions are feasible. If the problem is constrained to guarantee exactly one object per agent, then the optimal mechanism uses no information other than the agentsʼ ordinal preferences.

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  • Miralles, Antonio, 2012. "Cardinal Bayesian allocation mechanisms without transfers," Journal of Economic Theory, Elsevier, vol. 147(1), pages 179-206.
    • Handle: RePEc:eee:jetheo:v:147:y:2012:i:1:p:179-206
    DOI: 10.1016/j.jet.2011.11.002
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    Keywords

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    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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