Fall 2014 Seminar Series

DATE: 9/18/2014
LOCATION: E51-335
TIME: 4:15pm
Reception immediately following

SPEAKER:
Peng Shi

TITLE
Optimal Allocation without Money: an Engineering Approach

ABSTRACT
We study the allocation of heterogeneous services to agents without monetary transfers under incomplete information. Agents have private, multi-dimensional utilities over services, drawn from commonly known priors. The social planner's goal is to maximize a possibly complex public objective. For tractability, we take an ``engineering'' approach, in which we solve a large market approximation, and convert the solution into a feasible finite market mechanism that still yields good results.

 

We apply this framework to real data from Boston to design a mechanism that assigns students to public schools, to maximize a linear combination of utilitarian and max-min welfare, subject to capacity and transportation constraints. We show how to optimally solve a large market model with over 868 types of students and 77 schools, translate the solution into a finite market mechanism, which significantly outperforms the baseline plan chosen by the city in terms of efficiency, equity, and predictability.