Can "Complex" Market Designs Make it from Theory to Practice? Changing the Course Allocation Mechanism at Wharton

Eric Budish
2015 Proceedings of the The Third Conference on Auctions, Market Mechanisms and Their Applications  
Budish (2011) proposes a new mechanism for the problem of combinatorial assignment --e.g., assigning students to schedules of courses --called approximate competitive equilibrium from equal incomes (CEEI). While the CEEI mechanism satisfies attractive properties of efficiency, fairness, and incentives, it is "complicated" in several ways that one might reasonably wonder whether the theory could actually be implemented in the real world. To give just a few examples, agents are assumed to report
more » ... assumed to report their complete preferences over all possible schedules of courses, the mechanism is assumed to solve a high-dimensional approximate Kakutani fixed point problem, and all of the economic properties the mechanism satisfies involve approximations. While there is no perfect definition of a mechanism's complexity, for a contrast consider the famous Gale-
doi:10.4108/eai.8-8-2015.2261075 dblp:journals/sg/Budish16 fatcat:snp3nenrhjhy7knwghq7iirhxi