Reference

Yinghua He, Antonio Miralles, Marek Pycia, and Jianye Yan, A Pseudo-Market Approach to Allocation with Priorities, American Economic Journal: Microeconomics, 2017.

Abstract

We propose a pseudo-market mechanism for no-monetary-transfer allocation of indivisible objects based on priorities such as those in school choice. Agents are given token money, face priority-specific prices, and buy utility-maximizing random assignments. The mechanism is asymptotically incentive compatible, and the resulting assignments are fair and constrained Pareto efficient. Hylland and Zeckhauser's (1979) position-allocation problem is a special case of our framework, and our results on incentives and fairness are also new in their classical setting.

Keywords

Priority-based allocation; Efficiency; Stability; Incentive Compatibility; Pseudo-Market Approach;

JEL codes

  • C78: Bargaining Theory • Matching Theory
  • D82: Asymmetric and Private Information • Mechanism Design
  • I29: Other