Optimal Allocation with Ex Post Verification and Limited Penalties

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...

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Bibliographic Details
Published inThe American economic review Vol. 107; no. 9; pp. 2666 - 2694
Main Authors Mylovanov, Tymofiy, Zapechelnyuk, Andriy
Format Journal Article
LanguageEnglish
Published Nashville American Economic Association 01.09.2017
American Economic Assoc
Subjects
Agents
Economic theory
Game theory
Penalties
Social research
Social values
Verification
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Summary: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.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
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ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20140494