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16:30 | Micro Theory Research Seminar
Ivan Balbuzanov (Job Talk): “Short Trading Cycles: Kidney Exchange with Strict Ordinal Preferences”
University of California, Berkeley, USA
Author: Ivan Balbuzanov
Abstract: I study the problem of kidney exchange under strict ordinal preferences and with constraints on the length of the trading cycles. The assumption of strict ordinal preferences, which is a departure from the traditional assumption that all compatible kidneys are perfect substitutes for each other, allows the mechanism I propose to take advantage of the welfare-relevant information that strict preferences carry. Additionally, individual rationality in this setting incentivizes patient-donor pairs who are compatible with each other to participate in the kidney exchange, thus increasing the match rate for incompatible pairs. I show that deterministic mechanisms have poor properties in this environment. Instead, I explicitly define an individually rational, ordinally efficient and anonymous random mechanism for the case of pairwise kidney exchange. I then extend the idea behind this mechanism to arrive at a constrained ordinally efficient mechanism no matter what the ex-post constraints on the outcome are, including individual rationality, limits on the cycle lengths, maximizing the number of proposed transplantations etc. Several mechanisms from the existing literature are special cases of this mechanism. Finally, I show that individual rationality, ex-post efficiency and weak strategyproofness are incompatible for the cycle-constrained case making the proposed mechanism a second-best mechanism.
Keywords: random assignment; kidney exchange; probabilistic serial mechanism; individual rationality; ordinal efficiency; anonymity; housing market.
Full Text: “Short Trading Cycles: Kidney Exchange with Strict Ordinal Preferences”
