49 Pages Posted: 4 Aug 2018 Last revised: 27 Oct 2019
Date Written: October 24, 2019
We analyze the design of a mechanism to extract a ranking of individuals according to a unidimensional characteristic, such as ability or need. Individuals, connected on a social network, only have local information about the ranking. We show that a planner can construct an ex post incentive compatible and efficient mechanism if and only if every pair of friends has a friend in common. We characterize the windmill network as the sparsest social network for which the planner can always construct a complete ranking.
Keywords: social networks, mechanism design, peer ranking, targeting
JEL Classification: D85, D82, O12, D71
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