The United States Navy (USN) assigns personnel to jobs via assignments officers; placement guidance exists but the process is decentralized. Participant attitudes towards and limited experience with market design are possible impediments to its incorporation into the assignment process. We investigate the appetite for the use of the deferred acceptance during the assignment process. We implemented a pilot project incorporating deferred acceptance into 231 assignments of 174 USN physicians to 23 commands. Pre-intervention, we surveyed physicians to obtain baseline perceptions of the traditional assignment process; post-intervention we surveyed pilot project participants. Only 38.2% of pre-pilot survey respondents said they preferred assignment via deferred acceptance; in the post-pilot survey 78.7% of participating physicians and 87.8% of participating commands reported a desire to keep using deferred acceptance. Our study suggests that attitudes towards using market design in personnel assignment may improve with experience, facilitating broader acceptance of its usage in the future.
We investigate resilience to defaults in financial networks, where nodes hold shares in a common set of external assets. Price fluctuations in these assets can trigger shareholder defaults, propagating through the network and causing default cascades. In particular, we conduct a series of numerical experiments to elucidate the influence of the network structure on the financial system. Our investigation explores the effects of sparsity versus connectivity, clustering, and liability heterogeneity among financial institutions. We also examine the impact of diversification and asset investment heterogeneity.
This paper examines whether Catch-22 situations persist as equilibrium phenomena based on Gatekeepers' preferences rather than arbitrary rules. We model a game-theoretic scenario inspired by Heller's paradox, featuring a Requester (either Sane or Insane) who signals before a Gatekeeper decides to grant or deny their request. Our analysis identifies conditions where Catch-22 situations emerge as equilibria and evaluates their efficiency properties. Results demonstrate that such situations can arise naturally as efficient responses by Gatekeepers facing asymmetric information. The model is extended to labor markets, where "experience required for jobs, but jobs required for experience" creates similar dynamics.
Can private information or mediation change a sender's behavior and improve the receiver's expected utility in persuasive communication games? In a mediated Bayesian persuasion model, private information cannot improve the receiver's expected utility when the sender communicates it. When the intermediary communicates the private information, the receiver's expected utility improves only under sufficient accuracy of the intermediary's private information, as captured by a positive autarky value of the intermediary's private information (AVIPI). Finally, different classes of equilibria are analyzed to show that the sender's strategic behavior is generally affected by the intermediary's presence as he tries to persuade the intermediary to, in turn, persuade the receiver.
The input of the popular roommates problem consists of a graph G = (V, E) and for each vertex v in V, strict preferences over the neighbors of v. Matching M is more popular than M' if the number of vertices preferring M to M' is larger than the number of vertices preferring M' to M. A matching M is called popular if there is no matching M' that is more popular than M. Faenza et al. (2019) and Gupta et al. (2021) proved that determining the existence of a popular matching in a popular roommates instance is NP-complete. In this paper we identify a class of instances that admit a polynomial-time algorithm for the problem. We also test these theoretical findings on randomly generated instances to determine the existence probability of a popular matching in them.
A bullshitter neither knows nor cares about the truth, and therefore, it has been asserted, is more pernicious than a liar. We examine this assertion within the standard model of cheap talk communication where a bullshitter is modeled as an uninformed Sender. We show that in some circumstances, uncertainty about whether the Sender is informed or not can increase the welfare of the Receiver.
In Kenneth Arrow's last week of life at age 95, he reported that "I began my research career with an impossibility theorem. If I had time now, my last theorem would be an impossibility theorem about social choice for environmental policy." This paper completes the formalization, proof, and discussion of the theorem that Arrow then described.
One of the oldest results in the theory of two-sided matching is the entry comparative static, which shows that under the Gale-Shapley deferred acceptance algorithm, adding a new agent to one side of the market makes all the agents on the other side weakly better off. Here, we give a new proof of the entry comparative static, by way of a well-known property of deferred acceptance called respect for improvements. Our argument extends to yield comparative static results in more general settings, such as matching with slot-specific preferences.
An auctioneer wishes to sell multiple heterogeneous indivisible items to several bidders. Every bidder can demand several items, have complex preferences and faces a hard budget constraint. In this setting, Walrasian equilibria may fail to exist. We propose an ascending menu auction that always yields an efficient allocation of items, which is not only in the core but also strongly Pareto efficient. Furthermore, the auction finds a strong core allocation with a fully efficient assignment of items when bidders are not budget constrained.
In this paper, we establish conditions for the existence of an equilibrium in the equilibrium flow problem studied by Galichon et al. (2024). The problem nests several classical economic models such as bipartite matching models, hedonic pricing models, shortest-path and minimum-cost flow problems, and time-dependent routing problems.
We consider a setting in which a mechanism designer must choose the appropriate social alternative depending on the state of nature. We study the problem of optimal design and demonstrate that a mechanism which allocates resources so as to achieve the social optimum and assigns payments equal to the posterior expected utility of the agent at the social optimum, is an epsilon-optimal mechanism for environments with many players.
This paper studies screening problems with quasilinear preferences, where agents' private information is two-dimensional and the allocation instrument is one-dimensional. We define a preorder to compare types based on their marginal valuation to the instrument, which facilitates the reduction of incentive compatibility constraints that must be checked. With this approach, the discretized problem becomes computationally tractable. As an application, we numerically solve a problem introduced by Lewis & Sappington (1988)
We study multi-category housing allocation problems: A finite set of objects, which is sorted into categories of equal size, has to be allocated to a finite set of individuals, such that everyone obtains exactly one object from each category. We show that, in the large class of category-wise neutral and non-bossy mechanisms, any strategy-proof mechanism can be constructed by simply letting individuals choose an object from each category one after another following some priority order. We refer to these mechanisms as multi-category serial dictatorships and advocate for selecting priority orders across categories as fairly as possible.
Affordable housing lotteries often enforce a rule preventing duplicate lottery entries that makes the model in Hylland & Zeckhauser (1979) (HZ) inapplicable. We revisit HZ and propose a new individually stable (IS) allocation that can be achieved by a Tickets algorithm and accommodate the rule. A strictly envy-free (SEF) allocation is shown to be the unique IS and Pareto-optimal allocation, the outcome of the unique strong Nash equilibrium of a congestion game, and the unique Pseudo market equilibrium allocation in HZ. The algorithm always obtains the unique SEF allocation (if any) and fixes a designed flaw of existing lotteries.
This paper considers common use of natural, renewable resources. It identifies good prospects for efficiency and welfare. To be precise, a core outcome -- hence cooperation -- can be secured over time by principal planning of total quotas, and in time by agents who share these in short-term markets. Information flows in two directions: to the principal as market prices and from him as total quantities. Of particular interest is eventual convergence to a golden-rule, steady state.
We reexamine the characterization of incentive compatible single-parameter mechanisms introduced in Archer & Tardos(2001). We argue that the claimed uniqueness result, called `Myerson's Lemma' was not well established. We provide an elementary proof of uniqueness that unifies the presentation for two classes of allocation functions used in the literature and show that the general case is a consequence of a little known result from the theory of real functions. We also clarify that our proof of uniqueness is more elementary than the previous one. Finally, by generalizing our characterization result to more dimensions, we provide alternative proofs of revenue equivalence results for multiunit auctions and combinatorial auctions.
This study examines the refugee reallocation problem by modeling it as a two-sided matching problem between countries and refugees. Based on forced hierarchical priority classes, I study two interesting refugee matching algorithms to match refugees with countries. Axioms for fairness measures in resource allocation are presented by considering the stability and fairness properties of the matching algorithms. Two profiles are explicitly modeled---country preferences and forced prioritization of refugee families by host countries. This approach shows that the difference between the profiles creates blocking pairs of countries and refugee families owing to the forced hierarchical priority classes. Since the forced priorities for countries can cause certain refugees to linger in a lower priority class in every country, this study highlights the importance of considering refugees' preferences. It also suggests that a hierarchical priority class-based approach without category-specific quotas can increase countries' willingness to solve the refugee reallocation problem.
We consider financial networks where agents are linked to each other by financial contracts. A centralized clearing mechanism collects the initial endowments, the liabilities and the division rules of the agents and determines the payments to be made. A division rule specifies how the assets of the agents should be rationed. Since payments made depend on payments received, we are looking for solutions to a system of equations. The set of solutions is known to have a lattice structure, leading to the existence of a least and a greatest clearing payment matrix. Previous research has shown how decentralized clearing selects the least clearing payment matrix. We present a centralized approach towards clearing in order to select the greatest clearing payment matrix. To do so, we formulate the determination of the greatest clearing payment matrix as a programming problem. When agents use proportional division rules, this programming problem corresponds to a linear programming problem. We show that for other common division rules, it can be written as an integer linear programming problem.
In this paper and its companion paper, Board & Chung (2021), we provide foundations for a model of unawareness that can be used to distinguish between what an agent is unaware of and what she simply does not know. At an informal level, this distinction plays a key role in a number of recent papers such as Tirole (2009) and Chung & Fortnow (2007). Here we provide a set-theoretic (i.e., non-linguistic) version of our framework. We use our object-based unawareness structures to investigate two applications. The first application provides a justification for the contra proferentem doctrine of contract interpretation, under which ambiguous terms in a contract are construed against the drafter. Our second application examines speculative trade.
