PEW: Jon Eguía

Date
Sep 27, 2021, 4:15 pm4:15 pm
Location
127 Corwin

Speaker

Details

Event Description

Consider the following collective choice problem: a group of budget constrained agents must choose one of several alternatives. Can we design a simple budget balanced mechanism that: i) does not depend on the specific characteristics of the group, ii) does not require unaffordable transfers, and iii) implements utilitarianism if agents’ preferences are quasilinear and private information? We study the following mechanism: every agent can express any intensity of support or opposition to each alternative, by transferring to the rest of the agents wealth equal to the square of the intensity expressed; and the outcome is determined by the sums of the expressed intensities. We prove that as the group grows large, in every equilibrium of this quadratic- transfers mechanism, each agent’s transfer converges to zero, and the proba- bility that the mechanism chooses the efficient outcome converges to one.