Optimal Allocation via Waitlists: Simplicity through Information Design

77 Pages Posted: 8 Nov 2023 Last revised: 18 Feb 2024

See all articles by Itai Ashlagi

Itai Ashlagi

Stanford University - Department of Management Science & Engineering

Faidra Monachou

Harvard University

Afshin Nikzad

University of Southern California, Department of Economics

Date Written: June 12, 2023

Abstract

We study nonmonetary markets where objects that arrive over time are allocated to unit-demand agents with private types, such as in the allocation of public housing or deceased-donor organs. An agent’s value for an object is supermodular in her type and the object quality, and her payoff is her value minus her waiting cost. The social planner's objective is a weighted sum of allocative efficiency (i.e., the sum of values) and welfare (i.e., the sum of payoffs). We identify optimal mechanisms in the class of direct-revelation mechanisms. When the social planner can design the information disclosed to the agents about the objects, the optimal mechanism has a simple implementation: a first-come first-served waitlist with deferrals. In this implementation, the object qualities are partitioned into intervals; only the interval containing the object quality is disclosed to agents. When the planner places a higher weight on welfare, optimal disclosure policies become coarser.

Suggested Citation

Ashlagi, Itai and Monachou, Faidra and Nikzad, Afshin, Optimal Allocation via Waitlists: Simplicity through Information Design (June 12, 2023). Available at SSRN: https://ssrn.com/abstract=4599433 or http://dx.doi.org/10.2139/ssrn.4599433

Itai Ashlagi

Stanford University - Department of Management Science & Engineering ( email )

473 Via Ortega
Stanford, CA 94305-9025
United States

Faidra Monachou

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Afshin Nikzad (Contact Author)

University of Southern California, Department of Economics ( email )

Los Angeles, CA 90066
United States

HOME PAGE: http://afshin-nikzad.com

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