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Second-best mechanisms in queuing problems without transfers:The role of random priorities

Francis Bloch ()

Mathematical Social Sciences, 2017, vol. 90, issue C, 73-79

Abstract: This paper characterizes the second-best mechanism chosen by a benevolent planner under incentive compatibility constraints in queuing problems without monetary transfers. In the absence of monetary compensations, separation between types can only occur if jobs are processed with a probability strictly smaller than one for some configurations of the types. This entails a large efficiency cost, and the planner optimally chooses a pooling contract when types are drawn from a continuous distribution and when binary types are sufficiently close. In the binary model, a separating contract is optimal when the difference between high and low types is large, and results in a low probability of processing jobs when both agents announce high types.

Date: 2017
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DOI: 10.1016/j.mathsocsci.2017.08.006

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