Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/122175
Authors: 
Guo, Yingni
Hörner, Johannes
Year of Publication: 
2015
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 310
Abstract: 
We analyze the optimal design of dynamic mechanisms in the absence of transfers. The designer uses future allocation decisions to elicit private information. Values evolve according to a two-state Markov chain. We solve for the optimal allocation rule, which permits a simple implementation. Unlike with transfers, efficiency decreases over time, and both immiseration and its polar opposite are possible long-run outcomes. Considering the limiting environment in which time is continuous, we demonstrate that persistence hurts.
Subjects: 
Mechanism design
Principal-Agent
Token mechanisms
JEL: 
C73
D82
Document Type: 
Working Paper

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