An experimental study on the incentives of the probabilistic serial mechanism

Hugh-Jones, David ORCID: https://orcid.org/0000-0002-8360-8884, Kurino, Morimitsu and Vanberg, Christoph (2014) An experimental study on the incentives of the probabilistic serial mechanism. Games and Economic Behavior, 87. pp. 367-380. ISSN 0899-8256

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Abstract

We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which the theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.

Item Type: Article
Additional Information: Funding Information: We would like to thank Onur Kesten, M. Utku Ünver, and two referees for their comments. Kurino acknowledges the research support of Maastricht University when he was affiliated there. We acknowledge the financial support from Maastricht University , the Netherlands Organisation for Scientific Research ( NWO ) under grant VIDI-452-06-013 , and the University of Heidelberg .
Uncontrolled Keywords: incentives,probabilistic serial mechanism,finance,economics and econometrics ,/dk/atira/pure/subjectarea/asjc/2000/2003
Faculty \ School: Faculty of Social Sciences > School of Economics
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Depositing User: LivePure Connector
Date Deposited: 19 Jul 2022 15:30
Last Modified: 12 Aug 2022 05:45
URI: https://ueaeprints.uea.ac.uk/id/eprint/86626
DOI: 10.1016/j.geb.2014.06.001

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