Outside options in neutral allocation of discrete resources

Marek Pycia and Utku Unver

Review of Economic Design, 2022, vol. 26, issue 4, No 5, 604 pages

Abstract: Abstract Serial dictatorships have emerged as the canonical simple mechanisms in the literature on the allocation of indivisible goods without transfers. They are the only neutral and group-strategy-proof mechanisms in environments in which agents have no outside options and hence no individual rationality constraints (Svensson in Soc Choice Welfare 16:557–567, 1999). Accounting for outside options and individual rationality constraints, our main result constructs the class of group-strategy-proof, neutral, and non-wasteful mechanisms. These mechanisms are also Pareto efficient and we call them binary serial dictatorships. The abundance of the outside option—anybody who wants can opt out to get it—is crucial for our result.

Keywords: House allocation; Neutrality; Strategy-proofness; Outside options; Individual rationality; Serial dictatorship (search for similar items in EconPapers)
JEL-codes: C78 D82 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10058-022-00321-7

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