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Faculty of Economics

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Erdil, A.

Strategy-proof stochastic assignment

Journal of Economic Theory

Abstract: I study strategy-proof assignment mechanisms where the agents reveal their preference rankings over the available objects. A stochastic mechanism returns lotteries over deterministic assignments, and mechanisms are compared according to first-order stochastic dominance. I show that non-wasteful strategy-proof mechanisms are not dominated by strategy-proof mechanisms, however non-wastefulness is highly restrictive when the mechanism involves randomization. In fact, the Random Priority mechanism (i.e., the Random Serial Dictatorship), and a recently adopted school choice mechanism, Deferred Acceptance with Random Tie-breaking, are wasteful. I find that both these mechanisms are dominated by strategy-proof mechanisms. In general, strategy-proof improvement cannot be due to merely reshuffling objects, and therefore must involve assigning more objects.

Keywords: Random assignment, Strategy-proofness, Priority based assignment, Ordinal efficiency, School choice

JEL Codes: C78, D61, D63

Author links: Aytek Erdil  

Publisher's Link: http://www.sciencedirect.com/science/article/pii/S0022053113001828



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