Antonio Nicolò

The strategy-proof provision of public goods under congestion and crowding preferences

Abstract We examine the strategy-proof provision of excludable public goods when agents care about the number of other consumers. We show that strategy-proof and efficient social choice functions satisfying an outsider independence condition must always assign a fixed number of consumers, regardless of individual desires to participate. A hierarchical rule selects participants and a generalized median rule selects the level of the public good. Under heterogeneity in agents’ views on the optimal number of consumers, strategy-proof, efficient, and outsider independent social choice functions are much more limited and in an important case must be dictatorial.

Strategic divide and choose

We consider the classic cake-division problem when the cake is a heterogeneous good represented by an interval in the real line. We provide a mechanism to implement, in an anonymous way, an envy-free and efficient allocation when agents have private information on their preferences. The mechanism is a multi-step sequential game form in which each agent at each step receives a morsel of the cake that is the intersection of what she asks for herself and what the other agent concedes to her.

On cost sharing in the provision of a binary and excludable public good

We study efficiency and fairness properties of the equal cost sharing with maximal participation (ECSMP) mechanism in the provision of a binary and excludable public good. According to the maximal welfare loss criterion, the ECSMP is optimal within the class of strategyproof, individually rational and no-deficit mechanisms only when there are two agents. In general the ECSMP mechanism is not optimal: we provide a class of mechanisms obtained by symmetric perturbations of ECSMP with strictly lower maximal welfare loss. We show that if one of two possible fairness conditions is additionally imposed, the ECSMP mechanism becomes optimal.

Transplant quality and patientsʼ preferences in paired kidney exchange

Paired Kidney Exchange (PKE) programs solve incompatibility problems of donor–patient pairs in living donor kidney transplantation by arranging exchanges of donors among several pairs. Further efficiency gains may emerge if the programs consider the quality of the matches between patients and donors. Limitations on the number of simultaneous required operations imply that every efficient PKE program introduces incentives for the patients to misreport how they rank the option of remaining in dialysis with respect to the available kidneys. Truthfully revealing their preferences is however, the unique protective (lexicographic maximin) strategy for patients under pairwise exchange maximizing PKE programs.

Efficient and stable collective choices under gregarious preferences

We consider collective choice problems where a set of agents have to choose an alternative from a finite set and agents may or may not become users of the chosen alternative. An allocation is a pair given by the chosen alternative and the set of its users. Agents have gregarious preferences over allocations: given an allocation, they prefer that the set of users becomes larger. We require that the final allocation be efficient and stable (no agent can be forced to be a user and no agent who wants to be a user can be excluded). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property.

Equilibrium Selection in Sequential Games with Imperfect Information

Games with imperfect information often feature multiple equilibria, which depend on beliefs off the equilibrium path. Standard selection criteria such as passive beliefs, symmetric beliefs or wary beliefs rest on ad hoc restrictions on beliefs. We propose a new selection criterion that imposes no restrictions on beliefs: we select the action profile that is supported in equilibrium by the largest set of beliefs. We conduct experiments to test the predictive power of the existing and our novel selection criteria in two applications: a game of vertical multi-lateral contracting, and a game of electoral competition. We find that our selection criterion outperforms the other selection criteria.

Ex-ante licensing in sequential innovations

The theoretical literature on the cumulative innovation process has emphasized the role of ex-ante licensing – namely, licensing agreements negotiated before the follow-on innovator has sunk its R&D investment – in mitigating the risk of hold-up of future innovations. In this paper, we consider a patent-holder and a follow-on innovator bargaining over the licensing terms in a context where the former firm is unable to observe the timing of the R&D investment of the latter. We show that the possibilities of restoring the R&D incentives by setting the licensing terms appropriately are severely limited.

Incentive compatibility and feasibility constraints in housing markets

We analyze centralized housing markets under the existence of feasibility constraints on the number of agents and objects involved in the exchanges. We focus on an incomplete information setting where only the information about how each agent ranks her endowment is private. We show that under non-degenerate ex-ante probability distributions over preference profiles, no rule satisfies the joint requirements of individual rationality, (constrained) efficiency, and ordinally Bayesian incentive compatibility.

On the Distribution of Particularistic Goods

This chapter characterizes the set of equilibria in a model of distributive politics with inefficient local public goods. Candidates compete for office in three districts under a majoritarian rule. For each district there is a project that brings a benefit only to this district if implemented, but the aggregate cost for society of financing the project surpasses the localized benefit. Candidates can commit to implement the projects in any number of districts. If projects are very inefficient, in equilibrium candidates commit not to implement any of them. However, if projects are inefficient but not too inefficient, in the unique equilibrium candidates randomize between financing projects in zero, one or two districts, so that in expectation 43% of projects are implemented.

Efficient and Stable Collective Choices under Crowding Preferences

We consider a set of agents who have to choose one alternative among a finite set of social alternatives. A final allocation is a pair given by the selected alternative and the group of its users. Agents have crowding preferences over allocations: between any pair of allocations with the same alternative, they prefer the allocation with the largest number of users. We require that a decision be efficient and stable (which guarantees free participation in the group of users and free exit from it). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property. The social choice function implemented by the proposed mechanism is also anonymous and group stable.