Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter
- Authors
- Yoon, Kiho
- Issue Date
- 12월-2011
- Publisher
- ELSEVIER SCIENCE SA
- Keywords
- Mechanism; Random assignment; Winner-take-all assignment; Rank-order rules; Expenditure inefficiency
- Citation
- JOURNAL OF MATHEMATICAL ECONOMICS, v.47, no.6, pp.670 - 676
- Indexed
- SCIE
SSCI
SCOPUS
- Journal Title
- JOURNAL OF MATHEMATICAL ECONOMICS
- Volume
- 47
- Number
- 6
- Start Page
- 670
- End Page
- 676
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/111001
- DOI
- 10.1016/j.jmateco.2011.09.002
- ISSN
- 0304-4068
- Abstract
- We characterize the structure of optimal assignment rules when both allocative inefficiency and expenditure inefficiency (e.g., rent-seeking) are present. We find that the optimal structure critically depends on how the hazard rate of the value distribution behaves, and that it is often optimal to use probabilistic assignment rules so that the winner of the object is not always the one with the highest valuation. We also find that the inefficiency of the optimal assignment rule decreases as the variability of the value distribution increases. (C) 2011 Elsevier B.V. All rights reserved.
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Collections - College of Political Science & Economics > Department of Economics > 1. Journal Articles
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