Optimal Object Assignment Mechanisms With Imperfect Type Verification

45 Pages Posted: 4 Jun 2020

See all articles by Juan Sebastián Pereyra

Juan Sebastián Pereyra

Universidad de la República - Facultad de Ciencias Económicas; El Colegio de México

Francisco Silva

Pontifical Catholic University of Chile

Date Written: May 7, 2020

Abstract

There are objects of different quality to be assigned to agents. Agents can be assigned at most one object and there are not enough high quality objects for every agent. The social planner is unable to use transfers to give incentives for agents to convey their private information; instead, she is able to imperfectly verify their reports.\ We characterize a mechanism that maximizes welfare, where agents face different lotteries over the various objects, depending on their report. We then apply our main result to the case of college admissions. We find that optimal mechanisms are, in general, ex-post inefficient and do strictly better than the standard mechanisms that are typically studied in the matching literature.

Keywords: Imperfect Verification, Evidence, Mechanism Design

JEL Classification: C7, D8

Suggested Citation

Pereyra, Juan Sebastián and Silva, Francisco, Optimal Object Assignment Mechanisms With Imperfect Type Verification (May 7, 2020). Available at SSRN: https://ssrn.com/abstract=3581442 or http://dx.doi.org/10.2139/ssrn.3581442

Juan Sebastián Pereyra

Universidad de la República - Facultad de Ciencias Económicas ( email )

Gonzalo Ramírez 1926
CP 11200 Montevideo
Uruguay

El Colegio de México ( email )

Gonzalo Ramírez 1926
CP 11200 Montevideo
Uruguay

Francisco Silva (Contact Author)

Pontifical Catholic University of Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile

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