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Serial dictatorship: the unique optimal allocation rule when information is endogenous

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    (Department of Economics, Royal Holloway College, London and Max Planck Institut, Bonn)

Abstract

The study of matching problems typically assumes that agents precisely know their preferences over the goods to be assigned. Within applied contexts, this assumption stands out as particularly counterfactual. Parents typically do invest a large amount of time and resources to find the best school for their children; doctors run costly tests to establish the best kidney for a given patient. In this paper I introduce the assumption of endogenous information acquisition into otherwise standard house allocation problems. I find that there is a unique ex-ante Pareto-optimal, strategy-proof and non-bossy allocation mechanism: serial dictatorship. This stands in sharp contrast to the very large set of such mechanisms for house allocation problems without endogenous information acquisition.

Suggested Citation

  • ,, 2015. "Serial dictatorship: the unique optimal allocation rule when information is endogenous," Theoretical Economics, Econometric Society, vol. 10(2), May.
    • Handle: RePEc:the:publsh:1335
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    References listed on IDEAS

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    1. Szilvia Papai, 2000. "Strategyproof Assignment by Hierarchical Exchange," Econometrica, Econometric Society, vol. 68(6), pages 1403-1434, November.
    2. repec:bla:jpbect:v:3:y:2001:i:3:p:257-71 is not listed on IDEAS
    3. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, June.
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    Citations

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    Cited by:

    1. Artemov, Georgy, 2021. "Assignment mechanisms: Common preferences and information acquisition," Journal of Economic Theory, Elsevier, vol. 198(C).
    2. Estelle Cantillon, 2017. "Broadening the market design approach to school choice," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 613-634.
    3. Noda, Shunya, 2022. "Strategic experimentation with random serial dictatorship," Games and Economic Behavior, Elsevier, vol. 133(C), pages 115-125.
    4. Jian Low & Chen Hajaj & Yevgeniy Vorobeychik, 2022. "A Rotating Proposer Mechanism for Team Formation," Papers 2204.04251, arXiv.org.
    5. SangMok Lee, 2022. "Preference Learning in School Choice Problems," Papers 2202.08366, arXiv.org, revised Mar 2023.
    6. Rustamdjan Hakimov & Dorothea Kübler & Siqi Pan, 2023. "Costly information acquisition in centralized matching markets," Quantitative Economics, Econometric Society, vol. 14(4), pages 1447-1490, November.
    7. Gustavo Bergantiños & Jordi Massó & Alejandro Neme, 2017. "On societies choosing social outcomes, and their memberships: strategy-proofness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(4), pages 857-875, April.
    8. Yan Chen & YingHua He, 2022. "Information acquisition and provision in school choice: a theoretical investigation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(1), pages 293-327, July.
    9. Harless, Patrick & Phan, William, 2022. "Efficient mixtures of priority rules for assigning objects," Games and Economic Behavior, Elsevier, vol. 132(C), pages 73-89.
    10. Chen, Yan & He, YingHua, 2021. "Information acquisition and provision in school choice: An experimental study," Journal of Economic Theory, Elsevier, vol. 197(C).
    11. Raghavan, Madhav, 2020. "Swap-flexibility in the assignment of houses," Journal of Mathematical Economics, Elsevier, vol. 91(C), pages 1-10.
    12. Bettina Klaus & Alexandru Nichifor, 2020. "Serial dictatorship mechanisms with reservation prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(3), pages 665-684, October.
    13. Madhav Raghavan, 2017. "Serial Priority in Project Allocation: A Characterisation," Cahiers de Recherches Economiques du Département d'économie 17.17, Université de Lausanne, Faculté des HEC, Département d’économie.
    14. Sophie Bade, 2016. "Pareto-optimal matching allocation mechanisms for boundedly rational agents," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(3), pages 501-510, October.
    15. Tayfun Sönmez & M. Utku Ünver, 2024. "Matching under Non-transferable Utility: Theory," Boston College Working Papers in Economics 1068, Boston College Department of Economics.
    16. Mariya Halushka, 2021. "Obviously Strategy-proof Mechanism Design With Rich Private Information," Working Papers 2104E, University of Ottawa, Department of Economics.
    17. Sudharsan Sundar & Eric Gao & Trevor Chow & Matthew Ding, 2023. "Random Serial Dictatorship with Transfers," Papers 2312.07999, arXiv.org.

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    More about this item

    Keywords

    Serial dictatorship; house allocation; endogenous information;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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