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An experimental study on the incentives of the probabilistic serial mechanism

Hugh-Jones, David and Kurino, Morimitsu and Vanberg, Christoph (2014) 'An experimental study on the incentives of the probabilistic serial mechanism.' Games and Economic Behavior, 87. pp. 367-380. ISSN 0899-8256

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Abstract

We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which the theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.

Item Type: Article
Uncontrolled Keywords: Probabilistic serial mechanism; Incentives
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Government, Department of
Depositing User: Jim Jamieson
Date Deposited: 27 Jun 2015 11:15
Last Modified: 20 Dec 2015 02:00
URI: http://repository.essex.ac.uk/id/eprint/14140

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