An experimental study on the incentives of the probabilistic serial mechanism

David Hugh-Jones, Morimitsu Kurino and Christoph Vanberg

Games and Economic Behavior, 2014, vol. 87, issue C, 367-380

Abstract: We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which the theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.

Keywords: Probabilistic serial mechanism; Incentives (search for similar items in EconPapers)
JEL-codes: C78 C91 C92 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: An experimental study on the incentives of the probabilistic serial mechanism (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:87:y:2014:i:c:p:367-380

DOI: 10.1016/j.geb.2014.06.001

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