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Market and non-market mechanisms for the optimal allocation of scarce resources
Institution:1. Department of Quantitative Economics, Maastricht University, P.O. Box 616, 6200 MD Maastricht, the Netherlands;2. School of Business and Economics, RWTH Aachen University, Kackertstr. 7, 52072 Aachen, Germany;1. Paris School of Economics and Centre National de la Recherche Scientifique (CNRS), France;2. Research Institute for Economics and Business Administration (RIEB), Kobe University, Japan;3. Department of Economics, Bilkent University, Turkey;1. Management Science & Engineering, Stanford University, United States of America;2. Einstein Institute of Mathematics, Rachel & Selim Benin School of Computer Science & Engineering, and the Federmann Center for the Study of Rationality, The Hebrew University of Jerusalem, Israel;3. Microsoft Research, Israel
Abstract:A number of identical objects is allocated to a set of privately informed agents. Agents have linear utility in money. The designer wants to assign objects to agents that possess specific traits, but the allocation can only be conditioned on the willingness to pay and on observable characteristics. I solve for the optimal mechanism. The choice between market or non-market mechanisms depends on the statistical linkage between characteristics valued by the designer and willingness to pay.
Keywords:Non-market mechanisms  Rationing  Mechanism design
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