Dynamic Mechanisms without Money

Yingni Guo and Johannes Hörner
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Yingni Guo: Northwestern University

No 310, Economics Series from Institute for Advanced Studies

Abstract: We analyze the optimal design of dynamic mechanisms in the absence of transfers. The designer uses future allocation decisions to elicit private information. Values evolve according to a two-state Markov chain. We solve for the optimal allocation rule, which permits a simple implementation. Unlike with transfers, efficiency decreases over time, and both immiseration and its polar opposite are possible long-run outcomes. Considering the limiting environment in which time is continuous, we demonstrate that persistence hurts.

Keywords: Mechanism design; Principal-Agent; Token mechanisms (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2015-03
New Economics Papers: this item is included in nep-cta and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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https://irihs.ihs.ac.at/id/eprint/3129 First version, 2015 (application/pdf)

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Working Paper: Dynamic Mechanisms without Money (2015)
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