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Dynamic Mechanisms without Money

Author

Listed:
  • Guo, Yingni

    (Northwestern University)

  • Hörner, Johannes

    (Yale University)

Abstract

We analyze the optimal design of dynamic mechanisms in the absence of transfers. The designer uses future allocation decisions to elicit private information. Values evolve according to a two-state Markov chain. We solve for the optimal allocation rule, which permits a simple implementation. Unlike with transfers, efficiency decreases over time, and both immiseration and its polar opposite are possible long-run outcomes. Considering the limiting environment in which time is continuous, we demonstrate that persistence hurts.

Suggested Citation

  • Guo, Yingni & Hörner, Johannes, 2015. "Dynamic Mechanisms without Money," Economics Series 310, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:310
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    File URL: https://irihs.ihs.ac.at/id/eprint/3129
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    References listed on IDEAS

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    Cited by:

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    2. Bergemann, Dirk & Pavan, Alessandro, 2015. "Introduction to Symposium on Dynamic Contracts and Mechanism Design," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 679-701.
    3. Alex Smolin, 2021. "Dynamic Evaluation Design," American Economic Journal: Microeconomics, American Economic Association, vol. 13(4), pages 300-331, November.
    4. Rahul Deb & Mallesh M. Pai & Maher Said, 2018. "Evaluating Strategic Forecasters," American Economic Review, American Economic Association, vol. 108(10), pages 3057-3103, October.
    5. Brett Green & Curtis R. Taylor, 2016. "Breakthroughs, Deadlines, and Self-Reported Progress: Contracting for Multistage Projects," American Economic Review, American Economic Association, vol. 106(12), pages 3660-3699, December.
    6. Marina Halac & Pierre Yared, 2017. "Fiscal Rules and Discretion under Self-Enforcement," NBER Working Papers 23919, National Bureau of Economic Research, Inc.
    7. Rohit Lamba & Ilia Krasikov, 2017. "A Theory of Dynamic Contracting with Financial Constraints," 2017 Meeting Papers 1544, Society for Economic Dynamics.
    8. Rantakari, Heikki, 2023. "How to reward honesty?," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 129-145.
    9. Frankel, Alexander, 2016. "Discounted quotas," Journal of Economic Theory, Elsevier, vol. 166(C), pages 396-444.
    10. Hafalir, Isa & Miralles, Antonio, 2015. "Welfare-maximizing assignment of agents to hierarchical positions," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 253-270.
    11. Dogan, Mustafa & Uyanik, Metin, 2020. "Welfare maximizing allocation without transfers," Economics Letters, Elsevier, vol. 195(C).
    12. He, Wei & Li, Jiangtao, 2016. "Efficient dynamic mechanisms with interdependent valuations," Games and Economic Behavior, Elsevier, vol. 97(C), pages 166-173.
    13. Santiago R. Balseiro & Huseyin Gurkan & Peng Sun, 2019. "Multiagent Mechanism Design Without Money," Operations Research, INFORMS, vol. 67(5), pages 1417-1436, September.
    14. Shivam Gupta & Wei Chen & Milind Dawande & Ganesh Janakiraman, 2023. "Three Years, Two Papers, One Course Off: Optimal Nonmonetary Reward Policies," Management Science, INFORMS, vol. 69(5), pages 2852-2869, May.
    15. Dirk Bergemann & Alessandro Pavan, 2015. "Introduction to JET Symposium Issue on "Dynamic Contracts and Mechanism Design"," Cowles Foundation Discussion Papers 2016, Cowles Foundation for Research in Economics, Yale University.

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    More about this item

    Keywords

    Mechanism design; Principal-Agent; Token mechanisms;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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