An Experimental Study on the Incentives of the Probabilistic Serial Mechanism

20 Pages Posted: 12 Jul 2014

See all articles by David Hugh-Jones

David Hugh-Jones

University of East Anglia (UEA)

Morimitsu Kurino

WZB Berlin Social Science Center

Christoph Vanberg

Heidelberg University - Alfred Weber Institute for Economics

Date Written: June 6, 2013

Abstract

We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in sitations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.

Keywords: probabilistic serial mechanism, incentives

JEL Classification: C78, C91, C92

Suggested Citation

Hugh-Jones, David and Kurino, Morimitsu and Vanberg, Christoph, An Experimental Study on the Incentives of the Probabilistic Serial Mechanism (June 6, 2013). Available at SSRN: https://ssrn.com/abstract=2275199 or http://dx.doi.org/10.2139/ssrn.2275199

David Hugh-Jones (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Morimitsu Kurino

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

Christoph Vanberg

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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