Mechanism Design and Assignment Models
FRB Richmond Working Paper No. 03-9
33 Pages Posted: 3 Dec 2012
Date Written: July 29, 2003
Abstract
This mechanism design paper studies the assignment of people to projects over time. Inability to communicate interim shocks is a force for long-term assignments, though exceptions exist for high risk aversion. In contrast, costless reporting of interim shocks makes switching powerful for virtually all environments. Switching elicits honest reports and mitigates incentive constraints allowing, in particular, beneficial concealment of project quality. Properties of the production technology are also shown to matter. Substitutability of intertemporal effort is a force for long-term assignments while complementarity with Nash equilibrium strategies is a force for job rotation.
Keywords: assignment, private information, communication
JEL Classification: D82, L23
Suggested Citation: Suggested Citation
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