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Strategy-proof Pareto-improvement

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  • Alva, Samson
  • Manjunath, Vikram

Abstract

We consider a model where each agent has an outside option of privately known value. At a given allocation, we call the set of agents who do not exercise their outside options the “participants.” We show that one strategy-proof and individually rational mechanism weakly Pareto-improves another if and only if, at each preference profile, it weakly expands (in terms of set inclusion) the set of participants. Corollaries include: a sufficient condition for a mechanism to be on the Pareto-efficient frontier of strategy-proof mechanisms; uniqueness of strategy-proof Pareto-improvements under true preferences over certain normatively meaningful benchmark allocation rules; and a characterization of the pivotal mechanism.

Suggested Citation

  • Alva, Samson & Manjunath, Vikram, 2019. "Strategy-proof Pareto-improvement," Journal of Economic Theory, Elsevier, vol. 181(C), pages 121-142.
    • Handle: RePEc:eee:jetheo:v:181:y:2019:i:c:p:121-142
    DOI: 10.1016/j.jet.2019.01.004
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    2. BONKOUNGOU, Somouaoga, 2016. "Pareto dominance of deferred acceptance through early decision," Cahiers de recherche 2016-07, Universite de Montreal, Departement de sciences economiques.
    3. Ayoade, Nickesha & Pápai, Szilvia, 2023. "School choice with preference rank classes," Games and Economic Behavior, Elsevier, vol. 137(C), pages 317-341.
    4. Avataneo, Michelle & Turhan, Bertan, 2021. "Slot-specific priorities with capacity transfers," Games and Economic Behavior, Elsevier, vol. 129(C), pages 536-548.
    5. Aygün, Orhan & Turhan, Bertan, 2020. "Dynamic reserves in matching markets," Journal of Economic Theory, Elsevier, vol. 188(C).
    6. Rodríguez-Álvarez, Carmelo & Romero-Medina, Antonio, 2024. "School choice with transferable student characteristics," Games and Economic Behavior, Elsevier, vol. 143(C), pages 103-124.
    7. Somouaoga Bonkoungou, 2021. "Decentralized college admissions under single application," Review of Economic Design, Springer;Society for Economic Design, vol. 25(1), pages 65-91, June.
    8. Di Feng, 2023. "Efficiency in Multiple-Type Housing Markets," Papers 2308.14989, arXiv.org, revised Dec 2023.
    9. Battal Doğan & M. Bumin Yenmez, 2020. "Consistent Pareto improvement over the student-optimal stable mechanism," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 125-137, April.
    10. Zhang, Jun, 2023. "Strategy-proof allocation with outside option," Games and Economic Behavior, Elsevier, vol. 137(C), pages 50-67.
    11. Dur, Umut & Gitmez, A. Arda & Yılmaz, Özgür, 2019. "School choice under partial fairness," Theoretical Economics, Econometric Society, vol. 14(4), November.
    12. Troyan, Peter & Morrill, Thayer, 2020. "Obvious manipulations," Journal of Economic Theory, Elsevier, vol. 185(C).
    13. Troyan, Peter & Delacrétaz, David & Kloosterman, Andrew, 2020. "Essentially stable matchings," Games and Economic Behavior, Elsevier, vol. 120(C), pages 370-390.
    14. Minoru Kitahara & Yasunori Okumura, 2021. "Improving efficiency in school choice under partial priorities," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(4), pages 971-987, December.
    15. Marek Pycia & M. Utku Ünver, 2022. "Outside options in neutral allocation of discrete resources," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 581-604, December.
    16. Mustafa Oğuz Afacan & Umut Dur, 2023. "Strategy‐proof size improvement: is it possible?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 321-338, April.
    17. Somouaoga BONKOUNGOU, 2016. "Pareto Dominance of Deferred Acceptance through Early Decision," Cahiers de recherche 11-2016, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    18. Dilek Sayedahmed, 2022. "Centralized refugee matching mechanisms with hierarchical priority classes," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 7(1), pages 71-111, December.

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    More about this item

    Keywords

    Strategy-proofness; Pareto-improvement; Pareto-constrained participation-maximality; School choice; Pivotal mechanism;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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