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.
Priority-based allocation; Efficiency; Stability; Incentive Compatibility; Pseudo-Market Approach;
- C78: Bargaining Theory • Matching Theory
- D82: Asymmetric and Private Information • Mechanism Design
- I29: Other