Dynamic Mechanisms without Money

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

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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.

Item Type: IHS Series
Keywords: Mechanism design, Principal-Agent, Token mechanisms
Classification Codes (e.g. JEL): C73, D82
Date Deposited: 17 Mar 2015 13:55
Last Modified: 14 Jun 2024 11:01
URI: https://irihs.ihs.ac.at/id/eprint/3129

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