Cardinal Bayesian allocation mechanisms without transfers

Journal of Economic Theory, 2012, vol. 147, issue 1, 179-206

Abstract: In allocating goods with no use of monetary transfers, random allocation mechanisms can be designed in order to elicit information on preference intensities. I study the nontransfer allocation of two ex-ante identical objects under Bayesian incentive compatibility, with symmetric agents and independent private valuations. I find the ex-ante utilitarian-optimal mechanism, in which the probability of receiving a specified object is used as “numeraire” to purchase probability units of the other object. I characterize this mechanism as an appropriate combination of lotteries, auctions and insurance. The latter element ensures that efficient auctions are feasible. If the problem is constrained to guarantee exactly one object per agent, then the optimal mechanism uses no information other than the agentsʼ ordinal preferences.

Keywords: Nontransfer mechanism design; Allocation; Private information (search for similar items in EconPapers)
JEL-codes: D02 D78 D82 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:1:p:179-206

DOI: 10.1016/j.jet.2011.11.002

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