Marginal Mechanisms For Balanced Exchange

Vikram Manjunath and Alexander Westkamp

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Abstract: We study balanced exchange problems in which agents with responsive preferences are endowed with multiple indivisible objects and can trade without transfers (e.g. shift exchange, time-banking). Eliciting full preferences over bundles is infeasible, so mechanisms often rely solely on marginal preferences, that is, rankings of individual objects. We characterize when eliciting only marginal preferences is enough to unambiguously identify allocations that are efficient and individually rational in the sense that these properties hold with respect to any responsive preferences consistent with the elicited marginals. We parameterize domains of marginal preferences by which indifference classes can contain endowed and non-endowed objects. We show that the essentially unique maximal domain for which an unambiguously efficient and unambiguously individually rational marginal mechanism exists is trichotomous: agents rank objects in three tiers, with the bottom tier containing no endowed objects. We also consider incentives for truthful preference revelation. The maximal domain for which an efficient, individually rational, and strategy-proof mechanism exists is strongly trichotomous: agents rank objects in three tiers, with the bottom tier containing no endowed objects and the middle tier containing no non-endowed objects. The canonical marginal mechanism achieving our three desiderata on that domain is a serial dictatorship over individually rational allocations. When employed on the larger trichotomous domain, this mechanism still admits a weakly dominant strategy: reveal the top tier truthfully and omit non-endowed objects from the middle tier. We propose a family of gradual-revelation mechanisms that are also unambiguously efficient and individually rational on the trichotomous domain while providing better incentives for truthful revelation across all three tiers.

Date: 2025-02, Revised 2026-04
New Economics Papers: this item is included in nep-des and nep-mic
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