Research

Transparent Matching Mechanisms  

Theoretical Economics (forthcoming)

In a standard one-to-one agent-object matching model, I consider a central matching authority that publicly announces a strategy-proof mechanism and then initiates a matching. Following Akbarpour and Li (2020), the authority's commitment to the announced mechanism is limited to mechanisms rendering participants' observations indistinguishable from it. I call an announced mechanism transparent if any deviation from it would be detected.

The main findings identify trade-offs regarding transparency and other desirable properties: Under stability or efficiency, strategy-proof mechanisms are transparent if and only if they are dictatorial. At the same time, the agent-proposing Deferred Acceptance (DA) mechanism is tantamount to committing to stability, while efficient mechanisms often fail to commit to efficiency. This transparency trade-off between stability and efficiency persists when strategy-proofness is guaranteed.

 Regret-Free Truth-Telling in School Choice with Consent (with Yiqiu Chen) 

Theoretical Economics, vol.19, no. 2 (2024): 635–666

The Efficiency Adjusted Deferred Acceptance Rule (EDA) is a promising candidate mechanism for public school assignment. A potential drawback of EDA is that it could encourage students to game the system since it is not strategy-proof. However, to successfully strategize, students typically need information that is unlikely to be available to them in practice. We model school choice under incomplete information and show that EDA is regret-free truth-telling, which is a weaker incentive property than strategy-proofness and was introduced by Fernandez 2020. We also show that there is no efficient matching rule that weakly Pareto dominates a stable matching rule and is regret-free truth-telling. Note that the original version of EDA by Kesten 2010 weakly Pareto dominates a stable matching rule, but it is not efficient. 

A Theory of Auditability for Allocation Mechanisms (with Aram Grigoryan) - Working Paper

Extended abstract at ACM EC '23. 

In centralized mechanisms and platforms, participants do not fully observe each others' type reports. Hence, if there is a deviation from the promised mechanism, participants may be unable to detect it. We formalize a notion of auditabilty that captures how easy or hard it is to detect deviations from a mechanism. We find a stark contrast between the auditabilities of prominent mechanisms. We also provide tight characterizations of maximally auditable classes of allocation mechanisms. 

Auditability in School Choice (with Aram Grigoryan) 

AEA Papers and Proceedings, vol. 114, May (2024): p. 492-96

Robust Market Design with Opaque Announcements (with Aram Grigoryan) - Working paper (First Version August 2024)

We introduce a framework where the announcements of a clearinghouse about the allocation process are opaque in the sense that there can be more than one outcome compatible with a realization of type reports. We ask whether desirable properties can be ensured under opacity in a robust sense. A property can be guaranteed under an opaque announcement if every mechanism compatible with it satisfies the property. We find an impossibility result: strategy-proofness cannot be guaranteed under any level of opacity. In contrast, in some environments, weak Maskin monotonicity and non-bossiness can be guaranteed under opacity.

Envy and Strategic Choice in Matching Markets (with Lars Ehlers) - Work in Progress

We study the allocation of indivisible goods when agents are envy-averse. Instead of relying on static notions of envy, we study incentive concepts that take envy into account. Envy-proofness means that if an agent experiences envy in the original problem, then this envy is inevitable under any unilateral misreport. Our first main result characterizes all mechanisms that are envy-proof, non-wasteful, and individually rational; any such mechanism is efficient. Our second main result shows that the Deferred Acceptance algorithm is not envy-proof unless it is efficient. Finally, we also explore weaker notions and demonstrate that no stable mechanism can satisfy them. 

University of Bonn, Institute for Microeconomics

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mmoelle2@uni-bonn.de