Working Paper: CEPR ID: DP18466
Authors: Eduardo Perez-Richet; Vasiliki Skreta
Abstract: We study the optimal design of fraud-proof allocation mechanisms with- out transfers. An agent’s eligibility relies on a score reflecting social value, but gaming generates misallocations, mistrust, unfairness and other nega- tive externalities. We characterize optimal allocation rules that are immune to gaming under two classes of gaming technologies. We examine the im- pact of demographic changes on allocations within and across identifiable groups, while accounting for resource and quota constraints. Fraud-proof allocation rules enhance fairness and trust in allocation systems at the cost of some allocative efficiency.
Keywords: mechanism design; falsification; fraud; manipulation
JEL Codes: C72; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| optimal allocation mechanisms (D61) | deter manipulation (C90) |
| optimal allocation mechanisms (D61) | maximize allocative efficiency (D61) |
| fraudproofness (K42) | prevent agents from benefiting through gaming their scores (C70) |
| gaming ability (C72) | allocation probability for low-score agents (D79) |
| gaming ability (C72) | allocation probability for high-score agents (C73) |
| average worthiness is sufficiently high (I31) | allocation probability increases for all scores (C25) |
| demographic changes (J11) | allocation outcomes (D63) |