Comparison of screening devices

Frank Yang, Piotr Dworczak and Mohammad Akbarpour
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Frank Yang: Stanford University
Mohammad Akbarpour: Stanford University

No 83, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: A designer relies on a costly screening device to allocate a set of goods, aiming to maximize a social welfare function. We provide conditions for one screening device to dominate another. We show that the performance of a screening device depends on two channels: (i) targeting effectiveness which measures the alignment between the implemented and desired assignments, and (ii) rent provision which determines the utilities of agents receiving the goods net of the screening costs. We link these two channels to distinct properties of the joint distribution of agents’ characteristics, leading to a number of simple empirical tests for comparing screening devices.

Keywords: mechanism design; stochastic orders; costly screening; inequality-aware market design (search for similar items in EconPapers)
JEL-codes: D47 D61 D63 D82 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2023
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