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STRATEGY-PROOFNESS OF THE PROBABILISTIC SERIAL MECHANISM IN LARGE RANDOM ASSIGNMENT PROBLEMS

Author(s): 
Fuhito Kojima and Mihai Manea
Date: 
Tue, 2008-09-02
Abstract: 
In the random assignment problem, the probabilistic serial mechanism (Bogomolnaia and Moulin 2001) is ordinally e±cient and envy-free, but not strategy-proof. However, we show that agents have incentives to state their ordinal preferences truth-fully when the market is su±ciently large. Given a fixed set of object types and an agent with a fixed expected utility function over these objects, if the number of copies of each object type is su±ciently large, then truthful reporting of ordinal preferences is a weakly dominant strategy for the agent (for any set of other participating agents and their possible preferences). The better e±ciency and fairness properties of the prob-abilistic serial mechanism, together with the non-manipulability property we discover, support its implementation in many circumstances instead of the popular random serial dictatorship.
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