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The generalized random priority mechanism with budgets

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  • Hashimoto, Tadashi

Abstract

This paper studies allocation problems with and without monetary transfers, such as combinatorial auctions, school choice, and course allocation. Interdependent values and multidimensional signals are allowed. Despite known negative results, a mechanism exists that is feasible, ex post individually rational, ex post incentive compatible, and asymptotically both efficient and envy-free. This mechanism is a special case of the generalized random priority mechanism (GRP), which always satisfies the first three properties. The asymptotic properties follow as a corollary of the main theorem: GRP approximates virtually any infinite-market mechanism in large finite markets.

Suggested Citation

  • Hashimoto, Tadashi, 2018. "The generalized random priority mechanism with budgets," Journal of Economic Theory, Elsevier, vol. 177(C), pages 708-733.
  • Handle: RePEc:eee:jetheo:v:177:y:2018:i:c:p:708-733
    DOI: 10.1016/j.jet.2018.08.002
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    More about this item

    Keywords

    Ex post incentive compatibility; Random allocation; Random priority; Large market; Rational expectations equilibrium; Information aggregation;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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