Learning about the future and dynamic efficiency
Learning about the future and dynamic efficiency
We study an allocation problem where a set of objects needs to be allocated to agents arriving over time. The basic model is of the private, independent values type. The dynamically efficient allocation is implementable if the distribution of agents' values is known. Whereas lack of knowledge about the distribution is inconsequential in the static case, endogenous informational externalities arise if the designer gradually learns about the distribution by observing present values. These externalities may prevent the implementation of the dynamically efficient allocation. We provide necessary and sufficient conditions for the efficient allocation to be implementable. (JEL D11, D82)
1576-1587
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
4 September 2009
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex and Moldovanu, Benny
(2009)
Learning about the future and dynamic efficiency.
American Economic Review, 99 (4), .
(doi:10.1257/aer.99.4.1576).
Abstract
We study an allocation problem where a set of objects needs to be allocated to agents arriving over time. The basic model is of the private, independent values type. The dynamically efficient allocation is implementable if the distribution of agents' values is known. Whereas lack of knowledge about the distribution is inconsequential in the static case, endogenous informational externalities arise if the designer gradually learns about the distribution by observing present values. These externalities may prevent the implementation of the dynamically efficient allocation. We provide necessary and sufficient conditions for the efficient allocation to be implementable. (JEL D11, D82)
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Published date: 4 September 2009
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Local EPrints ID: 503678
URI: http://eprints.soton.ac.uk/id/eprint/503678
ISSN: 0002-8282
PURE UUID: 7451853d-7ee4-420b-b141-635b05797388
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Date deposited: 08 Aug 2025 16:43
Last modified: 09 Aug 2025 02:19
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Author:
Alex Gershkov
Author:
Benny Moldovanu
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