Strategy-proof allocation with outside option

Jun Zhang

Games and Economic Behavior, 2023, vol. 137, issue C, 50-67

Abstract: Strategy-proof mechanisms are widely used in market design. In an abstract allocation model in which outside options are available to agents, we prove two results that demonstrate the interplay between strategy-proofness and outside options. The two results treat deterministic allocation mechanisms and random allocation mechanisms in a unified way. The first result proves that, for individually rational and strategy-proof mechanisms, pinning down agents' probabilities of consuming outside options is equivalent to pinning down a mechanism. The second result presents a sufficient condition for two strategy-proof mechanisms to be welfare equivalent. We show the usefulness of the two results in several applications.

Keywords: Strategy-proofness; Outside option; Market design; Random assignment (search for similar items in EconPapers)
JEL-codes: C71 C78 D78 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:137:y:2023:i:c:p:50-67

DOI: 10.1016/j.geb.2022.11.004

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