Description: Micro/Macro/Trade/Dev/Env Reading Group speaker: Oguzhan Celebi (MIT)

Location: 368A Heady Hall

Title: "Adaptive Priority Mechanisms"

Abstract: How should authorities concerned with match quality and diversity, but uncertain over the distribution of agents' characteristics, allocate resources? We propose a new class of adaptive priority mechanisms (APM) that adjust agents' priorities as a function of the number of assigned agents with the same characteristics. When there is a single authority and preferences over diversity and quality are separable, we derive an APM that is optimal, generates unique and stable outcomes, and can specified solely in terms of the preferences of the authority. By contrast, the ubiquitous priority and quota mechanisms are optimal if and only if uncertainty is degenerate or risk aversion over diversity is infinitely low or high, respectively. When there are many authorities, each implementing an APM is a dominant strategy equilibrium. However, this equilibrium is generally inefficient. A centralized allocation mechanism that first uses an aggregate APM and then implements authority-specific quotas restores utilitarian efficiency.

Contact: Bertan Turhan