Friend-Based Ranking
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Francis Bloch
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Matthew Olckers
- American Economic Journal: Microeconomics (Forthcoming)
Abstract
We analyze the design of a mechanism to extract a ranking of individuals according to a unidimensional characteristic, such as ability or need. Individuals, connected on a social network, only have
local information about the ranking. We show that a planner can
construct an ex post incentive compatible and efficient mechanism
if and only if every pair of friends has a friend in common. We
characterize the windmill network as the sparsest social network
for which the planner can always construct a complete ranking.
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