Dynamic Incentives in Wait List Mechanisms

Dynamic Incentives in Wait List Mechanisms

By
Nikhil Agarwal, Itai Ashlagi, Paulo Somaini, Daniel Waldinger
American Economic Association: Papers and Proceedings. May
2018, Vol. 108, Pages 341-347

Many scarce public resources are allocated through wait lists that use priorities for individual agents. A new priority system for allocating deceased donor kidneys was adopted in 2014. This redesign was guided by simulations that held decision-rules fixed. We synthesize recent theoretical results to show that the welfare effects of a mechanism depend on the interaction between dynamic incentives and heterogeneity in preferences. We show evidence suggesting that patient decisions on the deceased donor kidney wait list respond to dynamic incentives. Therefore, an empirical approach to dynamic mechanism design is an essential complement to mechanism design theory in dynamic environments.