IDEAS home Printed from https://ideas.repec.org/a/spr/sochwe/v48y2017i1d10.1007_s00355-016-0978-8.html
   My bibliography  Save this article

Efficient lottery design

Author

Listed:
  • Onur Kesten

    (Carnegie Mellon University)

  • Morimitsu Kurino

    (University of Tsukuba)

  • Alexander S. Nesterov

    (WZB)

Abstract

There has been a surge of interest in stochastic assignment mechanisms that have proven to be theoretically compelling thanks to their prominent welfare properties. Contrary to stochastic mechanisms, however, lottery mechanisms are commonly used in real life for indivisible goods allocation. To help facilitate the design of practical lottery mechanisms, we provide new tools for obtaining stochastic improvements in lotteries. As applications, we propose lottery mechanisms that improve upon the widely used random serial dictatorship mechanism and a lottery representation of its competitor, the probabilistic serial mechanism. The tools we provide here can be useful in developing welfare-enhanced new lottery mechanisms for practical applications such as school choice.

Suggested Citation

  • Onur Kesten & Morimitsu Kurino & Alexander S. Nesterov, 2017. "Efficient lottery design," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(1), pages 31-57, January.
    • Handle: RePEc:spr:sochwe:v:48:y:2017:i:1:d:10.1007_s00355-016-0978-8
    DOI: 10.1007/s00355-016-0978-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00355-016-0978-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00355-016-0978-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kojima, Fuhito & Manea, Mihai, 2010. "Incentives in the probabilistic serial mechanism," Journal of Economic Theory, Elsevier, vol. 145(1), pages 106-123, January.
    2. Stergios Athanassoglou & Jay Sethuraman, 2011. "House allocation with fractional endowments," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(3), pages 481-513, August.
    3. Ferdinand M. Vieider & Clara Villegas-Palacio & Peter Martinsson & Milagros Mejía, 2016. "Risk Taking For Oneself And Others: A Structural Model Approach," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 879-894, April.
    4. Atila Abdulkadiroglu & Tayfun Sönmez, 2003. "School Choice: A Mechanism Design Approach," American Economic Review, American Economic Association, vol. 93(3), pages 729-747, June.
    5. John Duffy & Dietmar Fehr, 2018. "Equilibrium selection in similar repeated games: experimental evidence on the role of precedents," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 573-600, September.
    6. Atila Abdulkadiroglu & Tayfun Sonmez, 1998. "Random Serial Dictatorship and the Core from Random Endowments in House Allocation Problems," Econometrica, Econometric Society, vol. 66(3), pages 689-702, May.
    7. Yinghua He & Antonio Miralles & Jianye Yan, 2012. "Competitive Equilibrium from Equal Incomes for Two-Sided Matching," Working Papers 692, Barcelona School of Economics.
    8. Alexander Nesterov, "undated". "Fairness and Efficiency in a Random Assignment: Three Impossibility Results," BDPEMS Working Papers 2014006, Berlin School of Economics.
    9. Erdil, Aytek, 2014. "Strategy-proof stochastic assignment," Journal of Economic Theory, Elsevier, vol. 151(C), pages 146-162.
    10. Kojima, Fuhito, 2009. "Random assignment of multiple indivisible objects," Mathematical Social Sciences, Elsevier, vol. 57(1), pages 134-142, January.
    11. Hervé Crès & Hervé Moulin, 2001. "Scheduling with Opting Out: Improving upon Random Priority," Operations Research, INFORMS, vol. 49(4), pages 565-577, August.
    12. Atila Abdulkadiroglu & Parag A. Pathak & Alvin E. Roth, 2009. "Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the New York City High School Match," NBER Working Papers 14864, National Bureau of Economic Research, Inc.
    13. Hugh-Jones, David & Kurino, Morimitsu & Vanberg, Christoph, 2014. "An experimental study on the incentives of the probabilistic serial mechanism," Games and Economic Behavior, Elsevier, vol. 87(C), pages 367-380.
    14. Kesten, Onur & Unver, Utku, 2015. "A theory of school choice lotteries," Theoretical Economics, Econometric Society, vol. 10(2), May.
    15. Bogomolnaia, Anna & Moulin, Herve, 2001. "A New Solution to the Random Assignment Problem," Journal of Economic Theory, Elsevier, vol. 100(2), pages 295-328, October.
    16. Aytek Erdil, 2013. "Strategy-Proof Stochastic Assignment," Cambridge Working Papers in Economics 1333, Faculty of Economics, University of Cambridge.
    17. Kodritsch, Sebastian, 2015. "A note on the welfare of a sophisticated time-inconsistent decision-maker," Discussion Papers, Research Unit: Market Behavior SP II 2015-201, WZB Berlin Social Science Center.
    18. Atila Abdulkadiroglu & Parag A. Pathak & Alvin E. Roth, 2009. "Strategy-Proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match," American Economic Review, American Economic Association, vol. 99(5), pages 1954-1978, December.
    19. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    20. Yan Chen & Tayfun Sönmez, 2002. "Improving Efficiency of On-Campus Housing: An Experimental Study," American Economic Review, American Economic Association, vol. 92(5), pages 1669-1686, December.
    21. Zhou, Lin, 1990. "On a conjecture by gale about one-sided matching problems," Journal of Economic Theory, Elsevier, vol. 52(1), pages 123-135, October.
    22. Aytek Erdil & Haluk Ergin, 2008. "What's the Matter with Tie-Breaking? Improving Efficiency in School Choice," American Economic Review, American Economic Association, vol. 98(3), pages 669-689, June.
    23. Hashimoto, Tadashi & Hirata, Daisuke & Kesten, Onur & Kurino, Morimitsu & Unver, Utku, 2014. "Two axiomatic approaches to the probabilistic serial mechanism," Theoretical Economics, Econometric Society, vol. 9(1), January.
    24. Eric Budish, 2011. "The Combinatorial Assignment Problem: Approximate Competitive Equilibrium from Equal Incomes," Journal of Political Economy, University of Chicago Press, vol. 119(6), pages 1061-1103.
    25. Hylland, Aanund & Zeckhauser, Richard, 1979. "The Efficient Allocation of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 293-314, April.
    26. ,, 2009. "Asymptotic ordinal inefficiency of random serial dictatorship," Theoretical Economics, Econometric Society, vol. 4(2), June.
    27. Eric Budish & Yeon-Koo Che & Fuhito Kojima & Paul Milgrom, 2013. "Designing Random Allocation Mechanisms: Theory and Applications," American Economic Review, American Economic Association, vol. 103(2), pages 585-623, April.
    28. Mihai Manea, 2008. "Random serial dictatorship and ordinally efficient contracts," International Journal of Game Theory, Springer;Game Theory Society, vol. 36(3), pages 489-496, March.
    29. Abdulkadiroglu, Atila & Sonmez, Tayfun, 2003. "Ordinal efficiency and dominated sets of assignments," Journal of Economic Theory, Elsevier, vol. 112(1), pages 157-172, September.
    30. Kesten, Onur, 2009. "Why do popular mechanisms lack efficiency in random environments?," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2209-2226, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Demeulemeester, Tom & Goossens, Dries & Hermans, Ben & Leus, Roel, 2023. "A pessimist’s approach to one-sided matching," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1087-1099.
    2. Basteck, Christian, 2018. "Fair solutions to the random assignment problem," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 163-172.
    3. Harless, Patrick, 2019. "Efficient rules for probabilistic assignment," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 107-116.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nesterov, Alexander S., 2017. "Fairness and efficiency in strategy-proof object allocation mechanisms," Journal of Economic Theory, Elsevier, vol. 170(C), pages 145-168.
    2. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2014. "Assigning agents to a line," Games and Economic Behavior, Elsevier, vol. 87(C), pages 539-553.
    3. Afacan, Mustafa Oǧuz, 2018. "The object allocation problem with random priorities," Games and Economic Behavior, Elsevier, vol. 110(C), pages 71-89.
    4. Alexander Nesterov, "undated". "Fairness and Efficiency in a Random Assignment: Three Impossibility Results," BDPEMS Working Papers 2014006, Berlin School of Economics.
    5. Kojima, Fuhito, 2013. "Efficient resource allocation under multi-unit demand," Games and Economic Behavior, Elsevier, vol. 82(C), pages 1-14.
    6. Andrew McLennan & Shino Takayama & Yuki Tamura, 2024. "An Efficient, Computationally Tractable School Choice Mechanism," Discussion Papers Series 668, School of Economics, University of Queensland, Australia.
    7. Kojima, Fuhito & Manea, Mihai, 2010. "Incentives in the probabilistic serial mechanism," Journal of Economic Theory, Elsevier, vol. 145(1), pages 106-123, January.
    8. Han, Xiang, 0. "A theory of fair random allocation under priorities," Theoretical Economics, Econometric Society.
    9. Mennle, Timo & Seuken, Sven, 2021. "Partial strategyproofness: Relaxing strategyproofness for the random assignment problem," Journal of Economic Theory, Elsevier, vol. 191(C).
    10. Yajing Chen & Patrick Harless & Zhenhua Jiao, 2021. "The probabilistic rank random assignment rule and its axiomatic characterization," Papers 2104.09165, arXiv.org.
    11. Fuhito Kojima & M. Ünver, 2014. "The “Boston” school-choice mechanism: an axiomatic approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(3), pages 515-544, April.
    12. Bogomolnaia, Anna & Moulin, Herve, 2015. "Size versus fairness in the assignment problem," Games and Economic Behavior, Elsevier, vol. 90(C), pages 119-127.
    13. Kesten, Onur & Unver, Utku, 2015. "A theory of school choice lotteries," Theoretical Economics, Econometric Society, vol. 10(2), May.
    14. YIlmaz, Özgür, 2010. "The probabilistic serial mechanism with private endowments," Games and Economic Behavior, Elsevier, vol. 69(2), pages 475-491, July.
    15. Balbuzanov, Ivan, 2022. "Constrained random matching," Journal of Economic Theory, Elsevier, vol. 203(C).
    16. Liu, Peng, 2020. "Random assignments on sequentially dichotomous domains," Games and Economic Behavior, Elsevier, vol. 121(C), pages 565-584.
    17. Haris Aziz & Yoichi Kasajima, 2017. "Impossibilities for probabilistic assignment," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(2), pages 255-275, August.
    18. Miralles, Antonio & Pycia, Marek, 2021. "Foundations of pseudomarkets: Walrasian equilibria for discrete resources," Journal of Economic Theory, Elsevier, vol. 196(C).
    19. Kesten, Onur, 2009. "Why do popular mechanisms lack efficiency in random environments?," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2209-2226, September.
    20. Hugh-Jones, David & Kurino, Morimitsu & Vanberg, Christoph, 2014. "An experimental study on the incentives of the probabilistic serial mechanism," Games and Economic Behavior, Elsevier, vol. 87(C), pages 367-380.

    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sochwe:v:48:y:2017:i:1:d:10.1007_s00355-016-0978-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.