Richard Zeckhauser Photo

Richard Zeckhauser

Appointment
Frank Plumpton Ramsey Professor of Political Economy
Office Address
79 John F. Kennedy St. Littauer Bldg 312
617-495-1174
Aperjis, Christina, Maciej Kotowski, and Richard Zeckhauser. "Efficient Division When Preferences are Private: Using the Expected Externality Mechanism." HKS Faculty Research Working Paper Series RWP19-014, April 2019.

Abstract

We study the problem of allocating multiple items to two agents whose cardinal preferences are private information. If money is available, Bayesian incentive compatibility and ex-ante Pareto efficiency can be achieved using the Expected Externality Mechanism (EEM). Absent money, under certain reasonable conditions, Bayesian incentive compatibility and ex-post Pareto efficiency remain achievable with a modified EEM that uses one good as a numeraire in lieu of money. We study this modified EEM’s properties and compare it with other allocation procedures.