Suppose we have 10 people who each wants to rent 1 house for a year. We have 10 houses in the universe. Each bidder visits all the houses and assigns preference functions for each of them.
UH(bidder,house) is a positive value defined as how much it would please the bidder to get the house for free. For a given house, this value will be greatest for the bidders who like the house the most. UR(bidder,rent) is a negative value defined as how much it hurts the bidder to pay the rent without getting the house. For the richer bidders, this will tend to be a smaller value. U(bidder,house) = UH(bidder, house) + UR(bidder, house.rent) Let's assume that the landlords only care about how much rent they get: the bidders are identical in every other way. A short-sighted utilitarian would want to maximize the sum of everybody's utility and assign people to houses, and redistributing the wealth. A free-marketeer would want a mechanism for individuals to reach equilibrium: after the end of the assignments, there is no bidder who thinks that he could have gotten a better deal if they had known others' preferences beforehand. Of course, a bidder may not reveal his preferences beforehand because then the landlord of his favorite house could raise the price to its maximum, reducing the bidder's utility. optimize resource allocation auction game The problem: bidders and sellers don't know what the market is going to be like. Similar games are used in graduate school / college admissions. If students want to hold their space, they have to make a non-refundable deposit. Does anybody know this sort of games, and how they solve different problems? How to formulate a game to solve your particular RA problem.
