8,771 research outputs found
Equilibria Under the Probabilistic Serial Rule
The probabilistic serial (PS) rule is a prominent randomized rule for
assigning indivisible goods to agents. Although it is well known for its good
fairness and welfare properties, it is not strategyproof. In view of this, we
address several fundamental questions regarding equilibria under PS. Firstly,
we show that Nash deviations under the PS rule can cycle. Despite the
possibilities of cycles, we prove that a pure Nash equilibrium is guaranteed to
exist under the PS rule. We then show that verifying whether a given profile is
a pure Nash equilibrium is coNP-complete, and computing a pure Nash equilibrium
is NP-hard. For two agents, we present a linear-time algorithm to compute a
pure Nash equilibrium which yields the same assignment as the truthful profile.
Finally, we conduct experiments to evaluate the quality of the equilibria that
exist under the PS rule, finding that the vast majority of pure Nash equilibria
yield social welfare that is at least that of the truthful profile.Comment: arXiv admin note: text overlap with arXiv:1401.6523, this paper
supersedes the equilibria section in our previous report arXiv:1401.652
Unemployment, Vacancies, Wages
Peter A. Diamond delivered his Prize Lecture on 8 December 2010 at Aula Magna, Stockholm University.Search frictions;
Wage Determination And Employment In Traditional Agriculture
Wages in traditional agrarian societies are often observed to be above reservation wages even in the slack season when markets are in a state of excess labour supply. Models of non-cooperative wage setting by landlords which explicitly take account of the costs of supervising hired labour and emphasize worker heterogeneity are developed and analysed. Both symmetric and asymmetric information cases are considered. Conditions are given for the existence of competitive equilibria and their relationship to Nash equilibria. Nash equilibria are shown to be more likely to exist. Nash equilibria exhibit wage dispersion and involuntary unemployment or underemployment with identical workers earning different wage rates.wages; involuntary unemployment; underemployment; supervision costs
Social Welfare in One-Sided Matching Mechanisms
We study the Price of Anarchy of mechanisms for the well-known problem of
one-sided matching, or house allocation, with respect to the social welfare
objective. We consider both ordinal mechanisms, where agents submit preference
lists over the items, and cardinal mechanisms, where agents may submit
numerical values for the items being allocated. We present a general lower
bound of on the Price of Anarchy, which applies to all
mechanisms. We show that two well-known mechanisms, Probabilistic Serial, and
Random Priority, achieve a matching upper bound. We extend our lower bound to
the Price of Stability of a large class of mechanisms that satisfy a common
proportionality property, and show stronger bounds on the Price of Anarchy of
all deterministic mechanisms
An institutional economic approach to land and propterty markets: Urban dynamics and institutional change
Urban Development;Real Estate;Institutionalism;housing economics
The Futility of Utility: how market dynamics marginalize Adam Smith
Econometrics is based on the nonempiric notion of utility. Prices, dynamics,
and market equilibria are supposed to be derived from utility. Utility is
usually treated by economists as a price potential, other times utility rates
are treated as Lagrangians. Assumptions of integrability of Lagrangians and
dynamics are implicitly and uncritically made. In particular, economists assume
that price is the gradient of utility in equilibrium, but I show that price as
the gradient of utility is an integrability condition for the Hamiltonian
dynamics of an optimization problem in econometric control theory. One
consequence is that, in a nonintegrable dynamical system, price cannot be
expressed as a function of demand or supply variables. Another consequence is
that utility maximization does not describe equiulibrium. I point out that the
maximization of Gibbs entropy would describe equilibrium, if equilibrium could
be achieved, but equilibrium does not describe real markets. To emphasize the
inconsistency of the economists' notion of 'equilibrium', I discuss both
deterministic and stochastic dynamics of excess demand and observe that Adam
Smith's stabilizing hand is not to be found either in deterministic or
stochastic dynamical models of markets, nor in the observed motions of asset
prices. Evidence for stability of prices of assets in free markets simply has
not been found.Comment: 46 pages. accepte
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