Efficient Combinatorial Allocations: Individual Rationality versus Stability

Hitoshi Matsushima

The B.E. Journal of Theoretical Economics, 2019, vol. 19, issue 1, 11

Abstract: We investigate combinatorial allocations with opt-out types and clarify the possibility of achieving efficiency under incomplete information. We introduce two distinct collective decision procedures. The first procedure assumes that the central planner designs a mechanism and players have the option to exit. The mechanism requires interim individual rationality. The second procedure assumes that players design a mechanism by committing themselves to participate. The mechanism requires marginal stability against blocking behavior by the largest proper coalitions. We show that the central planner can earn non-negative revenue in the first procedure, if and only if he cannot do so in the second.

Keywords: efficient combinatorial allocations; bayesian incentive compatibility; opt-out types; interim individual rationality; marginal stability (search for similar items in EconPapers)
JEL-codes: D44 D61 D82 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bejte-2017-0072

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