Dynamic Mechanisms without Money

Guo, Yingni and Hörner, Johannes (March 2015) Dynamic Mechanisms without Money. IHS Economics Series 310, 71 p.

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Abstract or Table of Contents

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.

Item Type: IHS Series
Keywords: Mechanism design, Principal-Agent, Token mechanisms
Classification Codes (e.g. JEL): C73, D82
Status: Published
Date Deposited: 17 Mar 2015 13:55
Last Modified: 24 Jul 2017 17:50
URI: http://irihs.ihs.ac.at/id/eprint/3129

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