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.
Bloch, Francis, and Matthew Olckers.
American Economic Journal: Microeconomics,
Consumer Economics: Theory
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Network Formation and Analysis: Theory
Microeconomic Analyses of Economic Development
Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification