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Falsification-proof non-market allocation mechanisms

Author

Listed:
  • Perez-Richet, Eduardo

    (Department of Economics, Sciences Po)

  • Skreta, Vasiliki

    (Department of Economics, University of Texas at Austin and Department of Economics, University College London)

Abstract

Relying on manipulable characteristics to target the allocation of resources is fraught with difficulties. Naively optimal rules lead to falsification and allocative inefficiency. Optimizing the rule for allocative efficiency while accounting for falsification typically induces falsification, at a heavy cost to the agents. Moreover, falsification generates negative externalities. We characterize optimal falsification-proof rules under a broad range of falsification technologies. We also provide an honesty condition under which they solve the unconstrained problem of a planner who maximizes a weighted sum of allocative surplus and agents' welfare.

Suggested Citation

  • Perez-Richet, Eduardo & Skreta, Vasiliki, 0. "Falsification-proof non-market allocation mechanisms," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6687
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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