Optimal allocation with ex post verification and limited penalties

Tymofiy Mylovanov , Andriy Zapechelnyuk

    Research output: Contribution to journalArticlepeer-review

    14 Citations (Scopus)

    Abstract

    Several agents with privately known social values compete for a prize. The prize is allocated based on the claims of the agents, and the winner is subject to a limited penalty if he makes a false claim. If the number of agents is large, the optimal mechanism places all agents above a threshold onto a shortlist along with a fraction of agents below the threshold, and then allocates the prize to a random agent on the shortlist. When the number of agents is small, the optimal mechanism allocates the prize to the agent who makes the highest claim, but restricts the range of claims above and below.
    Original languageEnglish
    Pages (from-to)2666-2694
    JournalAmerican Economic Review
    Volume107
    Issue number9
    Early online date1 Sept 2017
    DOIs
    Publication statusPublished - Sept 2017

    Keywords

    • Mechanism design

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