Incentive Compatible Allocation Without Money RUGGIERO CAVALLO Yahoo Research Mechanism design typically involves the use of monetary payments to incentivize truthful reporting of private information. But what if payments are impossible? This letter summarizes recent work on how lotteries and the threat of non-allocation can be leveraged to similar ends in single-item allocation settings with a secondary good that can serve a limited num´raire role. e Categories and Subject Descriptors: J.4 [Social and behavioral Sciences]: Economics General Terms: Economics, Theory, Design Additional Key Words and Phrases: Mechanism Design, Social Welfare, Lotteries 1. INTRODUCTION Let's start with a couple stories. Story 1: Imagine you work at a large tech firm and you're tasked with designing an internal allocation policy for the company's vast internal computational resources. Imagine, further, that these resources take the following form: there is a virtually unlimited amount of "standard issue" computational capacity available, and then there is an elite high-performance computing cluster that is to be made available to only one job at a time. All potential users (researchers, product groups, etc.) have approximately the same value for the standard resource, but values vary widely (and privately) for the elite resource. And, users are selfish.
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Published: Nov 25, 2014