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Efficient Random Assignment with Cardinal and Ordinal Preferences

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  • James Fisher

    (United States Automobile Association, USA)

Abstract

We develop a finite random assignment model where players know either their cardinal or their ordinal preferences and may make cardinal or ordinal reports to an assignment mechanism. Under truthful reporting, we find that all mechanisms that disregard the cardinal information in players' reports (e.g., Deferred Acceptance and Probabilistic Serial) are utilitarian inefficient, as are classic mechanisms that make use of cardinal information (e.g., Pseudo-markets). Motivated by these negative results, we introduce a "Simple Mechanism" that makes use of cardinal information "in the right way." We establish that this mechanism is utilitarian efficient, treats equals equally, and makes truth-telling almost Bayesian incentive compatible.

Suggested Citation

  • James Fisher, 2018. "Efficient Random Assignment with Cardinal and Ordinal Preferences," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 3(1), pages 51-96, December.
    • Handle: RePEc:jmi:articl:jmi-v3i1a3
    DOI: 10.22574/jmid.2018.12.003
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    References listed on IDEAS

    as
    1. Atila Abdulkadiro?lu & Yeon-Koo Che & Yosuke Yasuda, 2015. "Expanding "Choice" in School Choice," American Economic Journal: Microeconomics, American Economic Association, vol. 7(1), pages 1-42, February.
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    Cited by:

    1. Ehlers, Lars & Majumdar, Dipjyoti & Mishra, Debasis & Sen, Arunava, 2020. "Continuity and incentive compatibility in cardinal mechanisms," Journal of Mathematical Economics, Elsevier, vol. 88(C), pages 31-41.

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    More about this item

    Keywords

    Cardinal and ordinal preferences; random assignment; utilitarian efficiency.;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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