Efficient Division When Preferences are Private: Using the Expected Externality Mechanism

Christina Aperjis, Maciej Kotowski and Richard Zeckhauser
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Christina Aperjis: Power Auctions LLC

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: We study the problem of allocating multiple items to two agents whose cardinal preferences are private information. If money is available, Bayesian incentive compatibility and ex-ante Pareto efficiency can be achieved using the Expected Externality Mechanism (EEM). Absent money, under certain reasonable conditions, Bayesian incentive compatibility and ex-post Pareto efficiency remain achievable with a modified EEM that uses one good as a numeraire in lieu of money. We study this modified EEM’s properties and compare it with other allocation procedures.

JEL-codes: D82 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-des and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp19-014

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