Abstract
We analyze the optimal design of dynamic mechanisms in the absence of transfers. The agent’s value evolves according to a two-state Markov chain. The designer uses future allocation decisions to elicit private information. We solve for the optimal allocation mechanism. Unlike with transfers, efficiency decreases over time. In the long run, polarization occurs. A simple implementation is provided. The agent is endowed with a “quantified entitlement,” corresponding to the number of units he is entitled to claim in a row.
Keywords
mechanism design; principal-agent; quota mechanism; token budget;
JEL codes
- D82: Asymmetric and Private Information • Mechanism Design
- C73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games
Reference
Yingni Guo, and Johannes Hörner, “Dynamic Allocation without Money”, TSE Working Paper, n. 20-1133, August 2020.
See also
Published in
TSE Working Paper, n. 20-1133, August 2020