Falsification-proof non-market allocation mechanisms

Abstract:Relying on manipulable characteristics to target the allocation of resources is fraught with difficulties. Naively optimal rules lead to falsification and allocative inefficiency. Optimizing the rule for allocative efficiency while accounting for falsification typically induces falsification, at a heavy cost to the agents. Moreover, falsification generates negative externalities. We characterize optimal falsification-proof rules under a broad range of falsification technologies. We also provide an honesty condition under which they solve the unconstrained problem of a planner who maximizes a weighted sum of allocative surplus and agents' welfare.

Theoretical Economics (econ.TH); Artificial Intelligence (cs.AI); Computer Science and Game Theory (cs.GT)

arXiv:2610.18625 [econ.TH]

(or arXiv:2610.18625v1 [econ.TH] for this version)

https://doi.org/10.48550/arXiv.2610.18625 Focus to learn more arXiv-issued DOI via DataCite (pending registration)

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