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Efficient lottery design

Onur Kesten, Morimitsu Kurino and Alexander Nesterov

No SP II 2015-203, Discussion Papers, Research Unit: Market Behavior from WZB Berlin Social Science Center

Abstract: There has been a surge of interest in stochastic assignment mechanisms which proved to be theoretically compelling thanks to their prominent welfare properties. Contrary to stochastic mechanisms, however, lottery mechanisms are commonly used for indivisible good allocation in real-life. To help facilitate the design of practical lottery mechanisms, we provide new tools for obtaining stochastic improvements in lotteries. As applications, we propose lottery mechanisms that improve upon the widely-used random serial dictatorship mechanism and a lottery representation of its competitor, the probabilistic serial mechanism. The tools we provide here can be useful in developing welfare-enhanced new lottery mechanisms for practical applications such as school choice.

Keywords: lottery; ex post efficiency; sd-efficiency; random serial dictatorship (search for similar items in EconPapers)
JEL-codes: C71 C78 D71 D78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2015
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