This paper considers a resource allocation mechanism that utilizes a profit-maximizing auctioneer/matchmaker in the Kelso-Crawford (1982) (many-to-one) assignment problem. We consider general and simple (individualized price) message spaces for firms' reports following Milgrom (2010). We show that in the simple message space, (i) the matchmaker's profit is always zero and an acceptable assignment is achieved in every Nash equilibrium, and (ii) the sets of stable assignments and strong Nash equilibria are equivalent. By contrast, in the general message space, the matchmaker may make a positive profit even in a strong Nash equilibrium. This shows that restricting message space not only reduces the information requirement but also improves resource allocation.
|Date of creation:||28 Oct 2009|
|Date of revision:||23 Apr 2012|
|Publication status:||published, Games and Economic Behavior|
|Contact details of provider:|| Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA|
Web page: http://fmwww.bc.edu/EC/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- LAUSSEL, Didier & LE BRETON, Michel, "undated".
"Conflict and cooperation. The structure of equilibrium payoffs in common agency,"
CORE Discussion Papers RP
1519, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Laussel, Didier & Le Breton, Michel, 2001. "Conflict and Cooperation: The Structure of Equilibrium Payoffs in Common Agency," Journal of Economic Theory, Elsevier, vol. 100(1), pages 93-128, September.
- Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
- B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
- Milgrom, Paul, 2010.
"Simplified mechanisms with an application to sponsored-search auctions,"
Games and Economic Behavior,
Elsevier, vol. 70(1), pages 62-70, September.
- Paul Milgrom, 2008. "Simplified Mechanisms with an Application to Sponsored-Search Auctions," Discussion Papers 08-013, Stanford Institute for Economic Policy Research.
- Roth, Alvin E., 1985. "The college admissions problem is not equivalent to the marriage problem," Journal of Economic Theory, Elsevier, vol. 36(2), pages 277-288, August.
- Alcalde, Jose & Perez-Castrillo, David & Romero-Medina, Antonio, 1998.
"Hiring Procedures to Implement Stable Allocations,"
Journal of Economic Theory,
Elsevier, vol. 82(2), pages 469-480, October.
- Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
- Takashi Hayashi & Toyotaka Sakai, 2009. "Nash implementation of competitive equilibria in the job-matching market," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(4), pages 453-467, November.
- Milgrom,Paul, 2004.
"Putting Auction Theory to Work,"
Cambridge University Press, number 9780521551847, December.
- Shin, Sungwhee & Suh, Sang-Chul, 1996. "A mechanism implementing the stable rule in marriage problems," Economics Letters, Elsevier, vol. 51(2), pages 185-189, May.
- Roth,Alvin E. & Sotomayor,Marilda A. Oliveira, 1992.
Cambridge University Press, number 9780521437882, December.
- Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
- Sonmez, Tayfun, 1997. "Games of Manipulation in Marriage Problems," Games and Economic Behavior, Elsevier, vol. 20(2), pages 169-176, August.
- KONISHI, Hideo & LE BRETON, Michel & WEBER, Shlomo, "undated".
"On coalition-proof Nash equilibria in common agency games,"
CORE Discussion Papers RP
1383, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Konishi, Hideo & Le Breton, Michel & Weber, Shlomo, 1999. "On Coalition-Proof Nash Equilibria in Common Agency Games," Journal of Economic Theory, Elsevier, vol. 85(1), pages 122-139, March.
When requesting a correction, please mention this item's handle: RePEc:boc:bocoec:721. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F Baum)
If references are entirely missing, you can add them using this form.