The Generalized Random Priority Mechanism with Budgets

55 Pages Posted: 12 Jan 2016 Last revised: 23 Sep 2019

Date Written: January 12, 2016

Abstract

This paper studies allocation problems with and without monetary transfers, such as combinatorial auctions, school choice, and course allocation. Interdependent values and multidimensional signals are allowed. Despite known negative results, a mechanism exists that is feasible, ex post individually rational, ex post incentive compatible, and asymptotically both efficient and envy-free. This mechanism is a special case of the generalized random priority mechanism (GRP), which always satisfies the first three properties. The asymptotic properties follow as a corollary of the main theorem: GRP approximates virtually any infinite-market mechanism in large finite markets.

Keywords: ex post incentive compatibility, random allocation, random priority, large market, rational expectations equilibrium, information aggregation

Suggested Citation

Hashimoto, Tadashi, The Generalized Random Priority Mechanism with Budgets (January 12, 2016). Journal of Economic Theory, Vol. 177, 2018, Available at SSRN: https://ssrn.com/abstract=2714260 or http://dx.doi.org/10.2139/ssrn.2714260

Tadashi Hashimoto (Contact Author)

Yeshiva University ( email )

500 West 185th Street
New York, NY NEW YORK 10033
United States

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