Abstract
We study the welfare maximizing assignment of several heterogeneous, commonly ranked objects to impatient agents with privately known characteristics who arrive sequentially according to a Poisson or renewal process. There is a deadline after which no more objects can be allocated. We first show that the dynamically efficient allocation, characterized by Albright [Albright, S.C., 1974. Optimal sequential assignments with random arrival times. Manage. Sci. 21 (1), 60-67], is implementable by the dynamic version of VCG mechanism. We then obtain several properties of the welfare maximizing policy using stochastic dominance measures of increased variability and majorization arguments. We also propose redistribution mechanisms that 1) implement the efficient allocation, 2) satisfy individual rationality, 3) never run a budget deficit, 4) may run a budget surplus that vanishes asymptotically.
| Original language | English |
|---|---|
| Pages (from-to) | 144-154 |
| Number of pages | 11 |
| Journal | Games and Economic Behavior |
| Volume | 68 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 2010 |
| Externally published | Yes |
Bibliographical note
Funding Information:✩ Some of the present results previously appeared in a discussion paper entitled “The Dynamic Assignment of Heterogeneous Objects: A Mechanism Design Approach”. We wish to thank David Parkes, an associated editor and two referees for many helpful remarks. We are grateful for financial support from the German Science Foundation, and from the Max Planck Research Prize. * Corresponding author. E-mail addresses: [email protected] (A. Gershkov), [email protected] (B. Moldovanu). 1 See McAfee and te Velde (2008), and Gershkov and Moldovanu (forthcoming-a) for several references to that large literature. 2 For extensive surveys of the search literature see Lippman and McCall (1981), and Mortensen (1986).
Keywords
- Dynamic mechanism design
- Sequential assignment