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Optimal budget-balanced ranking mechanisms to assign identical objects

Yan Long ()
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Yan Long: Huazhong University of Science and Technology

Economic Theory, 2020, vol. 70, issue 2, No 5, 467-502

Abstract: Abstract Strategy-proof and budget-balanced ranking mechanisms assign q units of an object to n agents. The efficiency loss is the largest ratio of surplus loss to efficient surplus, over all profiles of nonnegative valuations. The smallest efficiency loss is achieved by the following allocation rule: for $$q\le \lfloor \frac{n}{2}\rfloor $$ q ≤ ⌊ n 2 ⌋ , assign one object to each of the $$q-1$$ q - 1 top ranked agents, a substantial probability of one object to the qth ranked agent, and distribute the remaining probability equally to a group of agents ranked behind the qth agent; for $$q>\lfloor \frac{n}{2}\rfloor $$ q > ⌊ n 2 ⌋ , assign a small probability to the $$(q+1)$$ ( q + 1 ) th ranked agent, an equally substantial probability to a group of agents ranked immediately before the $$(q+1)$$ ( q + 1 ) th agent, and one object to each of the agent ranked before the group. In both cases, the size of the “equal group” depends on q and n. Suppose $$\frac{q}{n}$$ q n is fixed and $$\frac{q}{n}\ne \frac{1}{2}$$ q n ≠ 1 2 , then as q and n increase, the smallest efficiency loss tends to zero exponentially. Participation is voluntary in the above mechanisms only when q is smaller than a threshold that depends on n.

Keywords: Multiple-object assignment; Budget balance; Ranking mechanism; Worst-case analysis (search for similar items in EconPapers)
JEL-codes: D70 D82 D44 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00199-019-01216-5

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