Optimal Dynamic Allocation: Simplicity through Information Design

Abstract

We study dynamic nonmonetary markets where objects are allocated to unit-demand agents with private types. An agent’s value for an object is supermodular in her type and the quality of the object, and her payoff is quasilinear in her waiting cost. We analyze direct-revelation mechanisms that elicit agents’ types and assign them to objects over time. We identify the welfare-maximizing mechanism and show that it can be implemented by a first-come first-served wait-list with deferrals when the marketmaker can design the information disclosed to agents about the objects. The optimal disclosure policy pools adjacent object types.

JEL Classification: C78, D47