Searcharxiv⌕ Search

arXiv · 2609.12543

Stable Improvement Cycle Mechanism Versus Efficiency-adjusted Deferred Acceptance Mechanism beyond Weak Priority Orders

Abstract

This paper compares the stable improvement cycles (SIC) mechanism of Erdil and Ergin (2008) with the efficiency-adjusted deferred acceptance (EADA) mechanism of Kesten (2010) in school choice problems with incomplete priorities. When school priorities are strict partial orders, we show that the EADA mechanism produces a constrained efficient matching. Combined with earlier results for the SIC mechanism, this establishes the outcome equivalence of the two mechanisms: the sets of matchings attainable under them coincide. We then move beyond transitivity and consider acyclic priority relations. On this broader domain, neither mechanism is guaranteed to produce a constrained efficient matching, but their failures take opposite forms. The SIC mechanism may under-improve: its outcome is always stable but may be Pareto dominated by another stable matching. By contrast, the EADA mechanism may over-improve: its outcome is never Pareto dominated by any stable matching but may itself be unstable.

Explore related subjects

Keep this discovery

Explore connections, maps & timelines

BibTeXRIS

Minoru Kitahara, Yasunori Okumura. 2026-09-11. Stable Improvement Cycle Mechanism Versus Efficiency-adjusted Deferred Acceptance Mechanism beyond Weak Priority Orders. https://arxiv.org/abs/2609.12543

Cite the original work for its findings. Save a collection to share your selection of sources.

KEEP EXPLORING

Related papers

Multiple-Player War of Attrition with Asymmetric Private Values

This paper studies a war of attrition over public good provision among multiple ex-ante asymmetric privately informed players. In equilibrium, asymmetry leads to a stratified behavior pattern in which at most one player provides the public good at time zero with a positive probability, while the other players can become active one after another, each at a player-specific activation time, before which even his highest type does not provide the good. The equilibrium is essentially unique: the types who never provide make the players' costs of providing a saddle point of the equilibrium dynamics. Comparing two players in the same war, I show that the one with lower cost, more impatience, or a value distribution tilted toward high values in the sense of a higher revelation rate provides earlier at every value, other things equal. In large societies, the cost of delay is determined by the highest value across players.

econ.TH↗

Equitable Auctions

We study how auction design shapes surplus division among bidders. We introduce a parsimonious ex post equity notion and examine standard multi-unit auctions. The equity-optimal pricing depends sharply on the private-common value composition. Among mixed-price auctions, at one extreme, uniform pricing is always optimal for pure common values and, at the other, pay-as-bid pricing is preferred for pure private values under standard regularity assumptions. For any fixed monotone allocation rule, we characterize a BNIC interim-IR implementation that equalizes surplus ex post across all bidders and is revenue-maximizing among those that equalize surplus ex ante; efficient allocation permits parity among winners.

econ.TH↗

Hidden Commitment Power Is Powerless

A principal who offers a contract may renege when her default option is sufficiently attractive. The size of this temptation, which inversely measures her commitment power, is often the principal's private information. This paper asks how contracting outcomes change under this information asymmetry. Disciplining off-path beliefs with the Intuitive Criterion, I find that every type of principal behaves and earns payoffs as if she were commonly known to have the least commitment power. Hidden commitment power is therefore powerless, although commitment power can be valuable under symmetric information. The result delivers an unambiguous policy lesson on how to mitigate this information asymmetry prior to contracting: only measures that improve the worst case have value. In an application to credit rating, when the cost of a rating system grows with its number of grades, a rating system that sorts issuers into ordered bands is optimal, and each issuer contracts on the terms warranted by the floor of her band.

econ.TH↗