Approximately Efficient Resource Allocation: A Theoretical and Experimental Evaluation

40 Pages Posted: 15 Feb 2017 Last revised: 16 Jun 2023

See all articles by Nicole Immorlica

Nicole Immorlica

Microsoft Research

Robizon Khubulashvili

University of San Francisco

Sera Linardi

University of Pittsburgh

Brendan Lucier

Microsoft Research

Joshua Mollner

Northwestern University - Kellogg School of Management

E. Glen Weyl

Plural Technology Collaboratory, Microsoft Research Special Projects; Plurality Institute; GETTING-Plurality Research Network

Date Written: June 16, 2023

Abstract

Matching mechanisms that elicit strength-of-preference can exhibit efficiency gains over those that do not. To quantify these gains, we propose a measure of approximate ex-ante Pareto efficiency. We use this notion to quantify the efficiency improvement of the Boston mechanism and the raffles mechanism (an extension of the Boston mechanism, which we define) over the random serial dictatorship mechanism (RSD) and deferred acceptance mechanism (DA). We complement our theoretical analyses with simulation and experimental results. The simulation results show that these gains also hold for utilitarian welfare in certain parameter regimes. The experimental results focus on the raffles and DA mechanisms. Using human subjects, we find that the raffles mechanism yields higher average payoffs as predicted by the theory, despite the fact that subjects play only approximately optimal strategies.

Keywords: random assignment, cardinal utility, raffles, approximate Pareto efficiency, price of anarchy, experimental economics

JEL Classification: D47, D61, C78, D82, C62, C68

Suggested Citation

Immorlica, Nicole and Khubulashvili, Robizon and Linardi, Sera and Lucier, Brendan and Mollner, Joshua and Weyl, Eric Glen, Approximately Efficient Resource Allocation: A Theoretical and Experimental Evaluation (June 16, 2023). Available at SSRN: https://ssrn.com/abstract=2916337 or http://dx.doi.org/10.2139/ssrn.2916337

Nicole Immorlica

Microsoft Research ( email )

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Robizon Khubulashvili

University of San Francisco ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

HOME PAGE: http://https://www.robizonk.com/

Sera Linardi

University of Pittsburgh ( email )

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

Brendan Lucier

Microsoft Research ( email )

One Memorial Drive, 14th Floor
Cambridge, MA 02142
United States

Joshua Mollner

Northwestern University - Kellogg School of Management ( email )

2211 Campus Drive
Evanston, IL 60208
United States

Eric Glen Weyl (Contact Author)

Plural Technology Collaboratory, Microsoft Research Special Projects ( email )

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8579984513 (Phone)

HOME PAGE: http://www.glenweyl.com

Plurality Institute ( email )

GETTING-Plurality Research Network ( email )

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Suite 520N
Cambridge, MA 02138
United States

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