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The generalized random priority mechanism with budgets

Tadashi Hashimoto

Journal of Economic Theory, 2018, vol. 177, issue C, 708-733

Abstract: This paper studies allocation problems with and without monetary transfers, such as combinatorial auctions, school choice, and course allocation. Interdependent values and multidimensional signals are allowed. Despite known negative results, a mechanism exists that is feasible, ex post individually rational, ex post incentive compatible, and asymptotically both efficient and envy-free. This mechanism is a special case of the generalized random priority mechanism (GRP), which always satisfies the first three properties. The asymptotic properties follow as a corollary of the main theorem: GRP approximates virtually any infinite-market mechanism in large finite markets.

Keywords: Ex post incentive compatibility; Random allocation; Random priority; Large market; Rational expectations equilibrium; Information aggregation (search for similar items in EconPapers)
JEL-codes: C72 D44 D47 D61 D63 D82 (search for similar items in EconPapers)
Date: 2018
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