Redistributive Allocation Mechanisms

Akbarpour, Mohammad; Dworczak, Piotr; Kominers, Scott Duke

doi:10.2139/ssrn.3609182

Cited by 16 publications

(13 citation statements)

References 40 publications

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“…This formulation is easily generalized to other multiplicative, super-modular production functions and also (at least for some questions) to non-linear costs.34 This follows from the rearrangement inequality ofHardy, Littlewood, and Polya (1929). Under complete information, the set of feasible allocations is the set of measure-preserving mappings such that each subset of prizes is matched to a subset of agents of equal measure.35 In recent work,Akbarpour, Dworczak, and Kominers (2020) discussed the main role played by the extreme points identified above for problems where a designer maximizes a weighted sum of revenue and social surplus given an arbitrary set of Pareto weights.36 F being convex implies, in particular, that F first-order stochastically dominates the uniform distribution on [0 1]. The present result generalizes the one in HMS, who did not consider intermediate schemes.…”

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Extreme Points and Majorization: Economic Applications

Kleiner

Moldovanu

Strack

2021

ECTA

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We characterize the set of extreme points of monotonic functions that are either majorized by a given function f or themselves majorize f and show that these extreme points play a crucial role in many economic design problems. Our main results show that each extreme point is uniquely characterized by a countable collection of intervals. Outside these intervals the extreme point equals the original function f and inside the function is constant. Further consistency conditions need to be satisfied pinning down the value of an extreme point in each interval where it is constant. We apply these insights to a varied set of economic problems: equivalence and optimality of mechanisms for auctions and (matching) contests, Bayesian persuasion, optimal delegation, and decision making under uncertainty.

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“…3535 In recent work, Akbarpour, Dworczak, and Kominers (2020) discussed the main role played by the extreme points identified above for problems where a designer maximizes a weighted sum of revenue and social surplus given an arbitrary set of Pareto weights. …”

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Extreme Points and Majorization: Economic Applications

Kleiner

Moldovanu

Strack

2021

ECTA

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“…2727 If lump‐sum transfers are not available, then rationing can sometimes arise as a second‐best way of redistributing across the market. We undertake a more general analysis of the case without lump‐sum transfers in a follow‐up paper (Akbarpour ®Dworczak ®Kominers (2021)), which also allows heterogeneous objects. …”

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“…3434 We discuss redistributive allocation of essential goods in more detail in a follow‐up paper (Akbarpour ®Dworczak ®Kominers (2021)). …”

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Redistribution Through Markets

Dworczak¹,

Kominers

Akbarpour

2021

ECTA

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Policymakers frequently use price regulations as a response to inequality in the markets they control. In this paper, we examine the optimal structure of such policies from the perspective of mechanism design. We study a buyer‐seller market in which agents have private information about both their valuations for an indivisible object and their marginal utilities for money. The planner seeks a mechanism that maximizes agents' total utilities, subject to incentive and market‐clearing constraints. We uncover the constrained Pareto frontier by identifying the optimal trade‐off between allocative efficiency and redistribution. We find that competitive‐equilibrium allocation is not always optimal. Instead, when there is inequality across sides of the market, the optimal design uses a tax‐like mechanism, introducing a wedge between the buyer and seller prices, and redistributing the resulting surplus to the poorer side of the market via lump‐sum payments. When there is significant same‐side inequality that can be uncovered by market behavior, it may be optimal to impose price controls even though doing so induces rationing.

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“…The way we introduce quality differs fromAkbarpour et al (2020) who look at optimal allocation policies that depend on continuous good quality with transfers.…”

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Obstacles to Redistribution Through Markets and One Solution

Allen¹,

Rehbeck²

2021

Preprint

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Dworczak et al. (2021) study when certain market structures are optimal in the presence of heterogeneous preferences. A key assumption is that the social planner knows the joint distribution of the value of the good and marginal value of money. This paper studies whether relevant features of this distribution are identified from choice data. We show that the features of the distribution needed to characterize optimal market structure cannot be identified when demand is known for all prices. While this is a negative result, we show that the distribution of good value and marginal utility of money is fully identified when there is an observed measure of quality that varies. Thus, while Dworczak et al. ( 2021) abstract from quality, we show how including quality is crucial for potential applications.

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Redistributive Allocation Mechanisms

Cited by 16 publications

References 40 publications

Extreme Points and Majorization: Economic Applications

Extreme Points and Majorization: Economic Applications

Redistribution Through Markets

Obstacles to Redistribution Through Markets and One Solution

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