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Matching Allocation Problems with Endogenous Information Acquisition

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  • Sophie Bade

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

The paper introduces the assumption of costly information acquisition to the theory of mechanism design for matching allocation problems. It is shown that the assumption of endogenous information acquisition greatly changes some of the cherished results in that theory: in particular, the first-best might not be implementable. Moreover, it might not even be possible to implement the second-best through trade. In addition, the paper highlights the use of randomness in setting incentives for efficient learning. The trade-offs among simultaneous and sequential learning and among efficient learning and efficient allocations are discussed.

Suggested Citation

  • Sophie Bade, 2010. "Matching Allocation Problems with Endogenous Information Acquisition," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_46, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2010_46
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    File URL: http://www.coll.mpg.de/pdf_dat/2010_46online.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bubbles; Rational Expectations; Bonuses; Compensation Schemes; Financial Crises; Financial Policy;
    All these keywords.

    JEL classification:

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

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