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Dynamic Allocation without Money

Author

Listed:
  • Yingni Guo

    (Northwestern University [Evanston])

  • Johannes Hörner

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)

Abstract

We analyze the optimal design of dynamic mechanisms in the absence of transfers. The agent's value evolves according to a two-state Markov chain. The designer uses future allocation decisions to elicit private information. We solve for the optimal allocation mechanism. Unlike with transfers, efficiency decreases over time. In the long run, polarization occurs. A simple implementation is provided. The agent is endowed with a "quantified entitlement," corresponding to the number of units he is entitled to claim in a row.

Suggested Citation

  • Yingni Guo & Johannes Hörner, 2021. "Dynamic Allocation without Money," Working Papers hal-03187506, HAL.
    • Handle: RePEc:hal:wpaper:hal-03187506
    Note: View the original document on HAL open archive server: https://hal.science/hal-03187506v1
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    References listed on IDEAS

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    Cited by:

    1. Axel Niemeyer & Justus Preusser, 2023. "Simple Allocation with Correlated Types," CRC TR 224 Discussion Paper Series crctr224_2023_486, University of Bonn and University of Mannheim, Germany.

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    Keywords

    Mechanism design; Principal-agent; Quota mechanism; Token budget;
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