Ordinal Simplicity and Auditability in Discrete Mechanism Design

Marek Pycia and M. Utku Ãœnver
Authors registered in the RePEc Author Service: M. Utku Ünver

No 18958, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Designing mechanisms for environments without transfers, market designers usually restrict attention to ordinal mechanisms. Ordinal mechanisms are simpler for both designers and participants but miss potentially welfare-relevant information. Under what conditions focusing on ordinal mechanisms is without loss? We show that, in general, all group strategy-proof mechanisms are ordinal. All mechanisms maximizing an Arrovian social welfare function are ordinal; in a large class of environments, such Arrovian efficiency is implied by Pareto efficiency and a simple auditability condition. Strategy-proof mechanisms that are simple to audit are also ordinal. As applications, we characterize important classes of mechanisms in public choice as well as single-unit-demand and multiple-unit-demand allocation of private goods.

Date: 2024-03
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