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Strategy-Proofness of Stochastic Assignment Mechanisms

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  • André Schmelzer

    (Max Planck Institute for Research on Collective Goods, Germany)

Abstract

This paper seeks to identify which algorithm to employ in a situation where goods are distributed to individuals without using money, while treating everyone equally and respecting each individual's preferences. I compare two stochastic assignment mechanisms: Random serial dictatorship (RSD) and top trading cycles with random endowments (TTC). In standard theory, both algorithms are strategy-proof and yield the optimal result. In the experiment, RSD outperforms TTC. This can be attributed to a more dominant strategy play under RSD. Generally, subjects with extremely high and low levels of contingent reasoning play their dominant strategies. These results suggest that one optimal algorithm may outperform another one if individuals are boundedly rational.

Suggested Citation

  • André Schmelzer, 2018. "Strategy-Proofness of Stochastic Assignment Mechanisms," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 3(1), pages 17-50, December.
  • Handle: RePEc:jmi:articl:jmi-v3i1a2
    DOI: 10.22574/jmid.2018.12.002
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    3. Hakimov, Rustamdjan & Kübler, Dorothea, 2021. "Experiments on centralized school choice and college admissions: a survey," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 434-488.

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    More about this item

    Keywords

    Market design; mechanism design; randomization.;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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