This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. September 2009
  5. Learning about the Future and Dynamic Efficiency

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Learning about the Future and Dynamic Efficiency

  • Alex Gershkov
  • Benny Moldovanu
American Economic Review
vol. 99, no. 4, September 2009
(pp. 1576–87)
Download Full Text PDF

Abstract

We study an allocation problem where a set of objects needs to be allocated to agents arriving over time. The basic model is of the private, independent values type. The dynamically efficient allocation is implementable if the distribution of agents' values is known. Whereas lack of knowledge about the distribution is inconsequential in the static case, endogenous informational externalities arise if the designer gradually learns about the distribution by observing present values. These externalities may prevent the implementation of the dynamically efficient allocation. We provide necessary and sufficient conditions for the efficient allocation to be implementable. (JEL D11, D82)

Citation

Gershkov, Alex, and Benny Moldovanu. 2009. "Learning about the Future and Dynamic Efficiency." American Economic Review, 99 (4): 1576–87. DOI: 10.1257/aer.99.4.1576

JEL Classification

  • D11 Consumer Economics: Theory
  • D82 Asymmetric and Private Information