6 research outputs found
Market and Non-Market Mechanisms for the Optimal Allocation of Scarce Resources
Both market (e.g. auctions) and non-market mechanisms (e.g. lotteries and priority lists) are used to allocate a large amount of scarce public resources that produce large private benefits and small consumption externalities. I study a model in which the use of both market and non-market mechanisms can be rationalized. Agents are risk neutral and heterogeneous in terms of their monetary value for a good and their opportunity cost of money, which are both private information. The designer wants to allocate a set of identical goods to the agents with the highest values. To achieve her goal, she can screen agents on the basis of their observable characteristics, and on the basis of information on their willingness to pay that she can extract using market mechanisms. In contrast to models where willingness to pay and value coincide, a first best cannot be achieved. My main result is that both market and non-market mechanisms, or hybrid mechanisms, can be optimal depending on the prior information available to the designer. In particular, non-market mechanisms may be optimal if the value is positively correlated with the opportunity cost of money.
When Efficiency meets Equity in Congestion Pricing and Revenue Refunding Schemes
Congestion pricing has long been hailed as a means to mitigate traffic
congestion; however, its practical adoption has been limited due to the
resulting social inequity issue, e.g., low-income users are priced out off
certain roads. This issue has spurred interest in the design of equitable
mechanisms that aim to refund the collected toll revenues as lump-sum transfers
to users. Although revenue refunding has been extensively studied, there has
been no thorough characterization of how such schemes can be designed to
simultaneously achieve system efficiency and equity objectives.
In this work, we bridge this gap through the study of congestion pricing and
revenue refunding (CPRR) schemes in non-atomic congestion games. We first
develop CPRR schemes, which in comparison to the untolled case, simultaneously
(i) increase system efficiency and (ii) decrease wealth inequality, while being
(iii) user-favorable: irrespective of their initial wealth or values-of-time
(which may differ across users) users would experience a lower travel cost
after the implementation of the proposed scheme. We then characterize the set
of optimal user-favorable CPRR schemes that simultaneously maximize system
efficiency and minimize wealth inequality. These results assume a well-studied
behavior model of users minimizing a linear function of their travel times and
tolls, without considering refunds. We also study a more complex behavior model
wherein users are influenced by and react to the amount of refund that they
receive. Although, in general, the two models can result in different outcomes
in terms of system efficiency and wealth inequality, we establish that those
outcomes coincide when the aforementioned optimal CPRR scheme is implemented.
Overall, our work demonstrates that through appropriate refunding policies we
can achieve system efficiency while reducing wealth inequality.Comment: This paper was submitted to the inaugural ACM conference on Equity
and Access in Algorithms, Mechanisms, and Optimization (EAAMO
Cryptonetworks - The incentive-based Economics of Blockchain
Blockchain technology has the novel ability to ‘create' trust in a decentralised environment. With this technology, third-parties and middlemen are no longer necessary to enforce transactions. Instead, blockchain uses decentralised consensus protocols and embedded logic to enforce contracts. The applications of blockchain are vast and include cryptonetworks, the culmination of blockchain and crypto tokens. Cryptonetworks can have an impact on the business models of firms, both in terms of cost structure and value creation. By blending the functionality of centralised platforms with the community-orientated nature of the original open protocols of the internet, cryptonetworks enable value creation to be correctly assigned to the actual content creators through tokens. The work of Ronald Coase illustrated the need for firms to overcome the transaction costs of operating within the market. Cryptonetworks, however, provide an alternative ‘middle ground' option to the firm and the market, allowing both to benefit from reduced transaction costs and incentive maximisation of the market. In addition, the implementation of economics in today's cryptonetworks, often referred to as ‘cryptoeconomics', remains conventional and conservative, placing a limit on the potential of cryptonetworks. By revaluating and reconstructing today's value measurement criteria, cryptonetworks have the potential to move beyond a single ‘Hayekian price' and instead incorporate multiple other indexes that better measure and capture value creation as it pertains to wider social issues of production, distribution, and consumption of goods and services. Finally, this thesis incorporates a case study on the MakerDAO stablecoin as a practical illustration of a cryptonetwork
Market and non-market mechanisms for the optimal allocation of scarce resources
A number of identical objects is allocated to a set of privately informed agents. Agents have linear utility in money. The designer wants to assign objects to agents that possess specific traits, but the allocation can only be conditioned on the willingness to pay and on observable characteristics. I solve for the optimal mechanism. The choice between market or non-market mechanisms depends on the statistical linkage between characteristics valued by the designer and willingness to pay
Essays on macroeconomics and international trade
Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, June 2011."June 2011." Cataloged from PDF version of thesis.Includes bibliographical references.This thesis focuses on the study of different aspects of income inequality across and within countries. In the first chapter, I study how the optimal provision of human capital is distorted in the presence of borrowing constraints and private information on talent and wealth. It shows that elitist, non-merit based, access to higher education can be constrained optimal in poor and unequal countries. The second chapter documents how the IT revolution has changed the patterns of North-South trade and analyzes its effects on wage inequality. It provides theoretical and empirical results on wage polarization and a changes in the pattern of specialization. Finally, the third chapter provides a framework for estimating technological diffusion across countries. The framework is applied to study the diffusion of major technologies across the world since the Industrial Revolution. It is shown that differences in technology diffusion in the last two hundred years can account for two thirds of current income per capita differences.by Martà Mestieri.Ph.D