College admissions and the role of information : an experimental study

We analyze two well-known matching mechanisms—the Gale-Shapley, and the Top Trading Cycles (TTC) mechanisms—in the experimental lab in three different informational settings, and study the role of information in individual decision making. Our results suggest that—in line with the theory—in the college admissions model the Gale-Shapley mechanism outperforms the TTC mechanisms in terms of efficiency and stability, and it is as successful as the TTC mechanism regarding the proportion of truthful preference revelation. In addition, we find that information has an important effect on truthful behavior and stability. Nevertheless, regarding efficiency, the Gale-Shapley mechanism is less sensitive to the amount of information participants hold

Use and Abuse of Authority

Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach

An Efficient Protocol for Negotiation over Combinatorial Domains with Incomplete Information

We study the problem of agent-based negotiation in combinatorial domains. It is difficult to reach optimal agreements in bilateral or multi-lateral negotiations when the agents' preferences for the possible alternatives are not common knowledge. Self-interested agents often end up negotiating inefficient agreements in such situations. In this paper, we present a protocol for negotiation in combinatorial domains which can lead rational agents to reach optimal agreements under incomplete information setting. Our proposed protocol enables the negotiating agents to identify efficient solutions using distributed search that visits only a small subspace of the whole outcome space. Moreover, the proposed protocol is sufficiently general that it is applicable to most preference representation models in combinatorial domains. We also present results of experiments that demonstrate the feasibility and computational efficiency of our approach

Mechanism Design without Money via Stable Matching

Mechanism design without money has a rich history in social choice literature. Due to the strong impossibility theorem by Gibbard and Satterthwaite, exploring domains in which there exist dominant strategy mechanisms is one of the central questions in the field. We propose a general framework, called the generalized packing problem (\gpp), to study the mechanism design questions without payment. The \gpp\ possesses a rich structure and comprises a number of well-studied models as special cases, including, e.g., matroid, matching, knapsack, independent set, and the generalized assignment problem. We adopt the agenda of approximate mechanism design where the objective is to design a truthful (or strategyproof) mechanism without money that can be implemented in polynomial time and yields a good approximation to the socially optimal solution. We study several special cases of \gpp, and give constant approximation mechanisms for matroid, matching, knapsack, and the generalized assignment problem. Our result for generalized assignment problem solves an open problem proposed in \cite{DG10}. Our main technical contribution is in exploitation of the approaches from stable matching, which is a fundamental solution concept in the context of matching marketplaces, in application to mechanism design. Stable matching, while conceptually simple, provides a set of powerful tools to manage and analyze self-interested behaviors of participating agents. Our mechanism uses a stable matching algorithm as a critical component and adopts other approaches like random sampling and online mechanisms. Our work also enriches the stable matching theory with a new knapsack constrained matching model

Pareto-Optimal Assignments by Hierarchical Exchange

A version of the Second Fundamental Theorem of Welfare Economics that applies to a money-free environment, in which a set of indivisible goods needs to be matched to some set of agents, is established. In such environments, "trade" can be identied with the set of hierarchical exchange mechanisms dened by Papai (2000). Papai (2000)'s result – that any such mechanism yields Pareto-optimal allocations – can be interpreted as a version of the First Fundamental Theorem of Welfare Economics for the given environment. In this note, I show that for any Pareto-optimal allocation and any hierarchical exchange mechanism one can nd an initial allocation of ownership rights, such that the given Pareto-optimal allocation arises as a result of trade.

School Choice and Information An Experimental Study on Matching Mechanisms

We present an experimental study where we analyze three well- known matching mechanisms - the Boston, the Gale-Shapley, and the Top Trading Cycles mechanisms - in three different informational set- tings. Our experimental results are consistent with the theory, sug- gesting that the TTC mechanism outperforms both the Boston and the Gale-Shapley mechanisms in terms of efficiency and it is as suc- cessful as the Gale-Shapley mechanism regarding the proportion of truthful preference revelation, whereas manipulation is stronger un- der the Boston mechanism. In addition, even though agents are much more likely to revert to truthtelling in lack of information about the others' payooffs - ignorance may be beneficial in this context - , the TTC mechanism results less sensitive to the amount of information that participants hold. These results therefore suggest that the use of the TTC mechanism in practice is more desirable than of the others.

A Factory-based Approach to Support E-commerce Agent Fabrication

With the development of Internet computing and software agent technologies, agent-based e-commerce is emerging. How to create agents for e-commerce applications has become an important issue along the way to success. We propose a factory-based approach to support agent fabrication in e-commerce and elaborate a design based on the SAFER (Secure Agent Fabrication, Evolution & Roaming) framework. The details of agent fabrication, modular agent structure, agent life cycle, as well as advantages of agent fabrication are presented. Product-brokering agent is employed as a practical agent type to demonstrate our design and Java-based implementation

Generation of multi-modal dialogue for a net environment

In this paper an architecture and special purpose markup language for simulated affective face-to-face communication is presented. In systems based on this architecture, users will be able to watch embodied conversational agents interact with each other in virtual locations on the internet. The markup language, or Rich Representation Language (RRL), has been designed to provide an integrated representation of speech, gesture, posture and facial animation