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Serial Dictatorship: the Unique Optimal Allocation Rule when Information is Endogenous

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  • Sophie Bade

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

Abstract

The study of matching problems typically assumes that agents precisely know their preferences over the goods to be assigned. Within applied contexts, this assumption stands out as particularly counterfactual. Parents typically do invest a large amount of time and resources to find out which school would be best for their children, doctors run costly tests to establish which kidney might be best for a given patient. In this paper I introduce the assumption of endogenous information acquisition into otherwise standard house allocation problems. I find that there is a unique ex ante Pareto-optimal, strategy-proof and non-bossy allocation mechanism: serial dictatorship. This stands in sharp contrast to the very large set of such mechanisms for house allocation problems without endogenous information acquisition.

Suggested Citation

  • Sophie Bade, 2012. "Serial Dictatorship: the Unique Optimal Allocation Rule when Information is Endogenous," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_11, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2012_11
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    References listed on IDEAS

    as
    1. Szilvia Papai, 2000. "Strategyproof Assignment by Hierarchical Exchange," Econometrica, Econometric Society, vol. 68(6), pages 1403-1434, November.
    2. 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.
    3. Gerardi, Dino & Yariv, Leeat, 2008. "Information acquisition in committees," Games and Economic Behavior, Elsevier, vol. 62(2), pages 436-459, March.
    4. Takamiya, Koji, 2001. "Coalition strategy-proofness and monotonicity in Shapley-Scarf housing markets," Mathematical Social Sciences, Elsevier, vol. 41(2), pages 201-213, March.
    5. Ehlers, Lars, 2002. "Coalitional Strategy-Proof House Allocation," Journal of Economic Theory, Elsevier, vol. 105(2), pages 298-317, August.
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    More about this item

    Keywords

    Serial Dictatorship; House Allocation Problems; Endogenous Information;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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