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Serial dictatorship mechanisms with reservation prices

Author

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  • Bettina Klaus

    () (University of Lausanne, Internef)

  • Alexandru Nichifor

    () (University of Melbourne)

Abstract

We propose a new set of mechanisms, which we call serial dictatorship mechanisms with individual reservation prices for the allocation of homogeneous indivisible objects, e.g., specialist clinic appointments. We show that a mechanism $$\varphi $$ φ satisfies minimal tradability, individual rationality, strategy-proofness, consistency, independence of unallocated objects, and non-wasteful tie-breaking if and only if there exists a reservation price vector r and a priority ordering $$\succ $$ ≻ such that $$\varphi $$ φ is a serial dictatorship mechanism with reservation prices based on r and $$\succ $$ ≻ . We obtain a second characterization by replacing individual rationality with non-imposition. In both our characterizations r, $$\succ $$ ≻ , and $$\varphi $$ φ are all found simultaneously and endogenously from the properties. Finally, we illustrate how our model, mechanism, and results capture the normative requirements governing the functioning of some real-life markets and the mechanisms that these markets use.

Suggested Citation

  • Bettina Klaus & Alexandru Nichifor, 2020. "Serial dictatorship mechanisms with reservation prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 665-684, October.
  • Handle: RePEc:spr:joecth:v:70:y:2020:i:3:d:10.1007_s00199-019-01223-6
    DOI: 10.1007/s00199-019-01223-6
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    More about this item

    Keywords

    Serial dictatorship; Individual reservation prices; Priority ordering; Axiomatic characterization; Strategy-proofness; Consistency;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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