Dynamic Allocation without Money

Yingni Guo and Johannes Hörner

No 20-1133, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We analyze the optimal design of dynamic mechanisms in the absence of transfers. The agent’s value evolves according to a two-state Markov chain. The designer uses future allocation decisions to elicit private information. We solve for the optimal allocation mechanism. Unlike with transfers, efficiency decreases over time. In the long run, polarization occurs. A simple implementation is provided. The agent is endowed with a “quantified entitlement,” corresponding to the number of units he is entitled to claim in a row.

Keywords: mechanism design; principal-agent; quota mechanism; token budget (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Date: 2020-08-26
New Economics Papers: this item is included in nep-des
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:124604

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