An experimental study on the incentives of the probabilistic serial mechanism

David Hugh-Jones, Morimitsu Kurino, Christoph Vanberg

Research output: Contribution to journalArticle

5 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)367-380
Number of pages14
JournalGames and Economic Behavior
Volume87
DOIs
Publication statusPublished - 2014 Sep

Keywords

  • Incentives
  • Probabilistic serial mechanism

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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