informational constraints and the overlapping generations model folk and anti folk theorems this paper analyses the sustainability of inter generational transfers in samuelson s consumption loan model when agents are imperfectly informed about past events we find that with mild informational constraints transfers cannot be supported by pure strategy equilibria mixed strategies allow transfers to be sustained even if agents have little information so that a version of the folk theorem holds however these equilibria are not robust if each agent s utility function is subjected to a small random perturbation as in harsanyi 1973 these mixed strategy equilibria unravel and only the zero transfer allocation survives as the unique rationalizable outcome this result is an example of mixed strategy equilibrium of an extensive form game which cannot be purified

long range dependence in spanish political opinion poll series this paper investigates the time series properties of partisanship for five political parties in spain it is found that pure fractional processes with a degree of integration d between 0 6 and 0 8 fit the time series behaviour of aggregate opinion polls for mainstream parties quite well whereas values of d in the range of 0 3 to 0 6 are obtained for opinion polls related to smaller regional parties those results are in agreement with theories of political allegiance based on aggregation of heterogeneous voters with different degrees of commitment and pragmatism further those models are found to be useful in forecasting the results of the last general elections in spain as a further contribution new econometric techniques for estimation and testing of arfima model are used to provide the previous evidence copyright 2003 john wiley sons ltd

incentive compatibility in non quasilinear environments we derive several implications of incentive compatibility in general i e not necessarily quasilinear environments building on kos and messner 2013 we provide a partial characterization of incentive compatible mechanisms

money burning in the theory of delegation abstract this paper uses a lagrangian approach to provide sufficient conditions under which money burning expenditures are used in an optimal delegation contract for comparison we also establish simple sufficient conditions for the optimality of a cap allocation under a restricted set of preferences for a benchmark setting in which money burning is not allowed we also apply our findings to a model of cooperation and to a model with quadratic preferences and families of distribution functions in addition we provide several comparative statics results

what money canʼt buy efficient mechanism design with costly signals i study the ex ante efficient allocation of a set of quality heterogeneous objects to a number of heterogeneous risk neutral agents agents have independent private values which represent the maximum cost they are willing to sustain to obtain an object of unitary quality the designer faces a trade off between allocative efficiency and cost of screening because the cost sustained is wasted the optimal mechanism ranks agents based on their marginal contribution to social surplus and distributes objects to higher ranked agents the ranking is independent of the scarcity of objects or the extent of their heterogeneity if the hazard rates of the distributions of values are increasing agents are ranked according to their expected values if hazard rates are decreasing and agents are symmetric the objects are allocated to the agents that sustain the highest costs in general optimal mechanisms combine both pooling and screening of values

worst case optimal redistribution of vcg payments in multi unit auctions abstract for allocation problems with one or more items the well known vickrey clarke groves vcg mechanism aka clarke mechanism generalized vickrey auction is efficient strategy proof individually rational and does not incur a deficit however it is not strongly budget balanced generally the agents payments will sum to more than 0 we study mechanisms that redistribute some of the vcg payments back to the agents while maintaining the desirable properties of the vcg mechanism our objective is to come as close to budget balance as possible in the worst case for auctions with multiple indistinguishable units in which marginal values are nonincreasing we derive a mechanism that is optimal in this sense we also derive an optimal mechanism for the case where we drop the non deficit requirement finally we show that if marginal values are not required to be nonincreasing then the original vcg mechanism is worst case optimal

cooperation in ongoing organizations this paper argues that overlapping games can provide a natural theory of long lived organizations it shows that participation in organizations of infinite duration changes the incentives of agents with finite lives and will induce more cooperation than a static model would predict after developing the general theory we apply it to the description of career paths in organizations and show that it can be optimal to give the youngest workers the most arduous tasks

bid costs and endogenous bid caps we study contests where several privately informed agents bid for a price all bidders bear a cost of bidding that is an increasing function of their bids and moreover bids may be capped we show that regardless of the number of bidders if agents have linear or concave cost functions then setting a bid cap is not profitable for a designer who wishes to maximize the average bid on the other hand if agents have convex cost functions i e an increasing marginal cost then affectively capping the bids is profitable for a designer facing a sufficiently large number of bidders

maximum likelihood estimation of fractional cointegration with an application to u s and canadian bond rates we estimate a multivariate arfima model to illustrate a cointegration testing methodology based on joint estimates of the fractional orders of integration of a cointegrating vector and its parent series previous cointegration tests relied on a two step testing procedure and maintained the assumption in the second step that the parent series were known to have a unit root in our empirical example of fractional cointegration we illustrate how uncertainty regarding the order of integration of the parent series can be even more important than uncertainty regarding the order of integration of the cointegrating vector when testing for cointegration

consumption and fractional differencing old and new anomalies haubrich is an economic advisor at the federal reserve bank of cleveland the author would like to thank andrew abel angus deaton roger kormendi andrew lo and seminar participants at the university of pennsylvania the federal national mortgage association and the winter econometric society meetings for stimulating discussions working papers of the federal reserve bank of cleveland are preliminary materials circulated to stimulate discussion and critical comment the views stated herein are those of the author and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve system september 1990

is consumption too smooth long memory and the deaton paradox under common arima representations of income the permanent income hypothesis predicts that the volatility of consumption should be larger than the volatility of unanticipated shocks to income this prediction is not supported by the data the authors examine whether this apparent excess smoothness of consumption is the result of the arima representation s implicit restrictions on low frequency dynamics by using a generalized long memory stochastic representation the authors construct confidence intervals for the long run impulse response of income in the absence of such low frequency restrictions these intervals are quite wide and include regions in which excess smoothness vanishes copyright 1991 by mit press

stochastic olg models market structure and optimality for a general class of pure exchange olg economies under uncertainty we provide a complete characterization of the efficency properties of competitive equilibria when markets are only sequentially complete and the criterion of efficency is conditional pareto optimality we also consider a particular case in which markets fail to be even sequentially complete and provide a characterization when the criterion of efficency is weakened to ex post pareto optimality

evidence on the extent and potential sources of long memory in u s treasury security returns and yields unlike equity returns many fixed income return measures appear to display long memory we show that the extent of long memory differs strongly for gross and excess holding period returns on u s treasury securities granger and others have argued that long memory may only reflect infrequent structural breaks we explore the impact of structural instability on tests for long memory and find only weak indications that it lies behind the long memory in our return series the evidence of long memory remains strong for yield and term premia series even after accounting for a series of potential underlying structural changes

participation rules for pareto optimal clubs abstract this paper presents a unifying framework for the club participation problem using compensating variation measures of willingness to pay for membership with more prospective club members than the equilibrium club population pareto efficient participation rules are derived which depend upon whether or not individuals are assured of club access sale of lottery tickets offering club membership is shown to be a socially superior club participation allocation mechanism to sale of vouchers guaranteeing membership the willingness to pay format readily encompasses the buchanan case where all prospective club members are assured of club participation

competitive fair division several indivisible goods are to be divided among two or more players whose bids for the goods determine their prices an equitable assignment of the goods at competitive prices is given by a fair division procedure called the gap procedure that ensures 1 nonnegative prices that never exceed the bid of the player receiving the good 2 pareto optimality though coupled with possible envy 3 monotonicity such that higher bids never hurt in obtaining a good 4 sincere bids that preclude negative utility and 5 prices that are partially independent of the amounts bid as in a vickrey auction a variety of applications are discussed

optimal allocation with costly verification consider a principal with a good to allocate among a number of agents each of whom wants the good each agent i knows the value the principal receives if he gives the good to i but the principal does not this value need not coincide with the value to i of getting the good the principal can verify the agents private information at a cost but cannot use transfers there are a number of economic environments of interest that roughly correspond to this scenario we discuss a few below how does the principal maximize the expected gain from allocating the good less the costs of verification we characterize optimal mechanisms for such settings we construct an optimal mechanism with a particularly simple structure which we call a favored agent mechanism there is a threshold value and a favored agent say i if each agent other than i reports a value for the good below the threshold then the good goes to the favored agent and no verification is required if some agent other than i reports a value above the threshold then the agent who reports the highest value is checked this agent receives the good if and only if his claims are verified and the good goes to any other agent otherwise in addition we show that every optimal mechanism is essentially a randomization over optimal favored agent mechanisms in this sense we can characterize the

long memory in foreign exchange rates using the geweke porter hudak test we find evidence of long memory in exchange rate data this implies that the empirical evidence of unit roots in exchange rates may not be robust to long memory alternatives fractionally integrated autoregressive moving average arfima models are estimated by both the time domain exact maximum likelihood ml method and the frequency domain approximate ml method impulse response functions and forecasts based on these estimated arfima models are evaluated to gain insight into the long memory characteristics of exchange rates some tentative explanations of the long memory found in the exchange rates are discussed

the tradeoff of the commons we develop a model of scarce renewable resources to study the commons problem we show that contrary to conventional wisdom property rights can often be less efficient than a commons in particular we study two effects 1 waste which arises when individuals expend resources to use a resource unavailable due to congestion and 2 the risk of underutilization of the resource we provide necessary and sufficient conditions for each effect to dominate the other when the cost of determining the availability of a resource is low

are there long cycles in common stock returns an enormous amount of empirical work has been directed toward understanding the nature of stock price movements early studies such as those by alexander 2 3 fama 10 and fama and blume 11 support the contention that stock price changes follow a random walk thus cycles that appear to exist are simply a statistical artifact more recent efforts namely young 28 greene and fielitz 12 praetz 24 and renshaw 25 however provide some evidence against this hypothesis and suggest that stock price changes follow some type of a cyclic time path explanations for these contradictory findings rely on the way that information is disseminated to processed by and acted on by market participants to date three basic information based scenarios have appeared in the literature 1 not all information is of equal importance 2 not all participants have the same information and 3 not all participants are equal in their ability to process information this latter scenario is the most recent and has been used by heiner 13 to develop a theory of predictable behavior by constructing a competence difficulty c d gap construct kaen and rosenman 16 extend heiner s 13 work to provide an explanation for the presence of nonperiodic cycles in asset prices especially the prices and returns of common stock they maintain that according to heiner s theory market participants differ in their ability in making the correct buy and sell decisions under uncertainty in financial markets the spread between the participants competence in conjunction with the complexity of the information i e the c d gap results in price changes in the same direction if new contradictory information is of substantial import directional change occurs since the arrival of new information is posited to a random event the resulting periods of similar price change behavior appear to be nonperiodic cycles empirically kaen and rosenman 16 support their contention by citing several studies that have used rescaled

long memory and persistence in aggregate output abstract we examine persistence in u s aggregate output by estimating fractionally integrated arima models these models provide better low frequency approximations to the wold representation than previous stochastic specifications and earlier results on the importance of a permanent component emerge as special cases we find evidence of long memory which induces persistence though this long memory need not be associated with a unit root our point estimates indicate that macroeconomic shocks while persistent are distinctly less persistent than many earlier studies suggest however confidence intervals associated with the long run response are quite wide

rationing and rent dissipation in the presence of heterogeneous individuals this paper discusses the implications of rationing by waiting when consumers have different time costs and personal valuations the joint distribution function of time costs and personal valuations is used to characterize market equilibrium it is argued that under certain conditions an increase in the variance of time costs will reduce the dissipation of rent furthermore it is shown that introducing a secondary market for a rationed good does not necessarily improve welfare because total surplus under rationing by waiting depends more on the variance than on the level of time costs and personal valuations the model is also used to discuss other institutions that involve rent seeking activities such as the patent system and import quotas

waiting line auctions if prizes are to be awarded simultaneously at a specified time on a first come first served basis then individuals who queue for them will choose different waiting times through their arrivals at the queue this choice of arrival time at a queue is similar to the choice of a sealed tender in an auction an equilibrium for this waiting line auction is obtained here using methods for analyzing sealed tender auctions when individuals are risk neutral it is shown that several alternative waiting line allocation procedures result in the same transactions cost associated with waiting in line

on cross country differences in the persistence of real exchange rates abstract previous findings of long run purchasing power parity come mainly from data for industrial countries raising the issue of whether the results suffer sample selection bias and exaggerate the general relevance of parity reversion this study uncovers substantial cross country heterogeneity in the persistence of deviations from parity the results show that it is more likely rather than less likely to find parity reversion for developing countries than industrial countries although some persistence variations may partly reflect country differences in structural characteristics such as inflation experience and government spending a considerable portion of those variations seems unaccounted for

how not to raise money we show that standard winner pay auctions are inept fund raising mechanisms because of the positive externality bidders forgo if they top another s high bid revenues are suppressed as a result and remain finite even when bidders value a dollar donated the same as a dollar kept this problem does not occur in lotteries and all pay auctions where bidders pay irrespective of whether they win we introduce a general class of all pay auctions rank their revenues and illustrate how they dominate lotteries and winner pay formats the optimal fund raising mechanism is an all pay auction augmented with an entry fee and reserve price

cooperation in microcredit borrowing groups identity sanctions and reciprocity in the production of collective goods cooperation to produce collective goods is widespread in society and yet so is its failure theorists have identified competing mechanisms for facilitating group cooperation including group identity sanctions and reciprocity here i use empirical data to explore how these mechanisms influence cooperation in the natural laboratory of microcredit borrowing groups microcredit makes loans to high risk borrowers through borrowing groups in which individuals access to credit is dependent on the behavior of other members of the group thereby creating a social dilemma for members and an opportunity to observe cooperation in real world groups by analyzing both collective goods production loans and compliance repayment i find that the competing mechanisms have differential effects group identity sanctions and reciprocity are all associated with more borrowing in the group only reciprocity however limits loan delinquency and is associated with group longevity suggesting both that collective goods p

when costly voting is beneficial abstract we present a costly voting model in which each voter has a private valuation for their preferred outcome of a vote when there is a zero cost to voting all voters vote and hence all values are counted equally regardless of how high they may be by having a cost to voting only those with high enough values would choose to incur this cost we show that by adding this cost welfare may be enhanced even when the cost of voting is wasteful such an effect occurs when there is both a large enough density of voters with low values and the expected value of voters is high enough

r s analysis of foreign exchange rates under two international monetary regimes abstract the purpose of this study is to examine empirically the behavior of foreign exchange markets during the most recent experiences with fixed and flexible rates specifically this study explores the possibility that long term dependence is present in the exchange rate series for the british pound french franc and german mark in terms of the u s dollar using r s analysis positive long term dependence is uncovered for each exchange rate during the flexible regime but negative dependence is found in the fixed period

the optimal allocation of prizes in contests we study a contest with multiple not necessarily equal prizes contestants have private information about an ability parameter that affects their costs of bidding the contestant with the highest bid wins the first prize the contestant with the second highest bid wins the second prize and so on until all the prizes are allocated all contestants incur their respective costs of bidding the contest s designer maximizes the expected sum of bids our main results are 1 we display bidding equlibria for any number of contestants having linear convex or concave cost functions and for any distribution of abilities 2 if the cost functions are linear or concave then no matter what the distribution of abilities is it is optimal for the designer to allocate the entire prize sum to a single first prize 3 we give a necessary and sufficient conditions ensuring that several prizes are optimal if contestants have a convex cost function

auctionin entry into tournaments a research tournament model with heterogeneous contestants is presented for a large class of contests the optimal number of competitors is two this insight makes designing the tournament easier and highlights the importance of selecting highly qualified contestants while customary uniform price and discriminatory price auctions are intuitively appealing mechanisms for solving this adverse selection problem in practice they generally will not be efficient mechanism for selecting contestants instead we propose an alternative auction format that is equally simple to implement and efficiently selects the most qualified contestants to compete regardless of the form of contestant heterogeneity

are output fluctuations transitory according to the conventional view of the business cycle fluctuations in output represent temporary deviations from trend the purpose of this paper is to question this conventional view if fluctuations in output are dominated by temporary deviations from the natural rate of output then an unexpected change in output today should not substantially change one s forecast of output in say five or ten years our examination of quarterly postwar united states data leads us to be skeptical about this implication the data suggest that an unexpected change in real gnp of 1 percent should change one s forecast by over 1 percent over a long horizon

on the power of dickey fuller tests against fractional alternatives abstract we examine the properties of dickey fuller unit root tests under fractionally integrated alternatives and find that these tests have quite low power

optimal allocation with ex post verification and limited penalties several agents with privately known social values compete for a prize the prize is allocated based on the claims of the agents and the winner is subject to a limited penalty if he makes a false claim if the number of agents is large the optimal mechanism places all agents above a threshold onto a shortlist along with a fraction of agents below the threshold and then allocates the prize to a random agent on the shortlist when the number of agents is small the optimal mechanism allocates the prize to the agent who makes the highest claim but restricts the range of claims above and below

efficient voting with penalties abstract simple majority does not reflect the intensity of voters preferences this paper presents an efficient collective choice mechanism with two alternatives when the designer may use non transferable punishments to persuade agents to reveal their private information the designer faces a dilemma a punishment may induce a more correct choice but its cost is socially wasteful the efficient mechanism is a weighted majority weight of each individual is known ex ante and no punishments are applied if preferences are relatively homogeneous eliciting types through punishments in order to construct type specific weights should occur if preference intensity is relatively heterogeneous

real exchange rates under the gold standard purchasing power parity is one of the most important equilibrium conditions in international macroeconomics empirically it is also one of the most hotly contested numerous recent studies for example have sought to determine the validity of purchasing power parity using data from the post bretton woods float and have reached different conclusions we assert that most such studies are flawed for two reasons first the post 1973 data contain by definition only a very limited amount of the low frequency information relevant for examination of long run parity second the dynamic econometric techniques used to model deviations from parity are typically quite crude with respect to admissible low frequency dynamics both deficiencies are rectified in the present paper with dramatic results we construct a new data set of 16 real exchange rates covering more than a century of the classic gold standard period and we study deviations from parity using long memory models that allow for subtle forms of mean

assigning resources to budget constrained agents this article studies different methods of assigning a good to budget constrained agents schemes that assign the good randomly and allow resale may outperform the competitive market in terms of utilitarian efficiency the socially optimal mechanism involves random assignment at a discount an in kind subsidy and a cash incentive to discourage low valuation individuals from claiming the good copyright oxford university press

optimal allocation without money an engineering approach we study the allocation of heterogeneous services to agents with incomplete information and without monetary transfers agents have private multidimensional utilities over services drawn from commonly known priors the social planner s goal is to maximize a potentially complex public objective for tractability we take an engineering approach in which we solve a large market approximation and convert the solution into a feasible finite market mechanism that still yields good results we apply this framework to real data from boston to design a mechanism that assigns students to public schools in order to maximize a linear combination of utilitarian and max min welfare subject to capacity and transportation constraints we show how to optimally solve a large market formulation with more than 868 types of students and 77 schools and we translate the solution into a finite market mechanism that significantly outperforms the baseline plan chosen by the city in terms of efficiency equity and predic

optimal allocation without transfer payments abstract often an organization or government must allocate goods without collecting payment in return this may pose a difficult problem either when agents receiving those goods have private information in regards to their values or needs in this paper we find an optimal mechanism to allocate goods when the designer is benevolent while the designer cannot charge agents he can receive a costly but wasteful signal from them we find conditions for cases in which ignoring these costly signals by giving agents equal share or using lotteries if the goods are indivisible is optimal in other cases those that send the highest signal should receive the goods however we then show that there exist cases where more complicated mechanisms are superior also we show that the optimal mechanism is independent of the scarcity of the goods being allocated

a repeated game with finitely lived overlapping generations of players abstract this paper analyzes infinitely repeated noncooperative games where the players have finite but overlapping terms thus the nature of the game remains constant but the identity of the players changes over time this type of scenario depicts the situation facing firm managers in regulated or oligopolistic environments despite finite lives which lead players to always choose opportunistic actions at the end of their careers it is shown that there are equilibria where cooperative behavior emerges in this noncooperative setting further a folk theorem result is obtained any individually rational payoffs can be realized as a subgame perfect equilibrium journal of economic literature classification numbers 022 026

consumption innovation persistence and the excess smoothness debate based on studies using us data consumption is too smooth relative to the implications of the rational expectations permanent income hypothesis repih of consumption we examine this and a number of related methodologicalissues for the uk using maximum likelihood estimation mle of an autoregressive fractionally integrated moving average arfima model of the income process we conclude that an innovation to income has a persistent effect on consumption and that in contrast to the findings from us studies consumption is too volatile compared to the repih model further mle is substantially more efficient than the semi parametric method of estimating arfima models which has previously been used in this area

forecasting tourism demand with arma based methods abstract the forecast of tourism volume in the form of arrivals is of special importance for tourism and other hospitality industries because it is an indicator of future demand thereby providing basic information for subsequent planning and policy making in this paper three univariate arma based models are applied to tourism demand as represented by the number of world wide visitors to hong kong japan korea taiwan singapore thailand the philippines australia and new zealand the study employs both monthly and quarterly time series generated from nine principal tourist destinations in asian pacific region in the forecasting exercise to ensure the reliability of the forecasting evaluation forecasting performance based on disaggregated arrival series in a particular destination is examined as well the general impression is that the arma based models perform very well and in some cases the magnitude of mean absolute percentage error is lower than 2 level

optimal voting rules we study dominant strategy incentive compatible dic and deterministic mechanisms in a social choice setting with several alternatives the agents are privately informed about their preferences and have single crossing utility functions monetary transfers are not feasible we use an equivalence between deterministic dic mechanisms and generalized median voter schemes to construct the constrained efficient optimal mechanism for an utilitarian planner optimal schemes for other welfare criteria such as say a rawlsian maximin can be analogously obtained

cooperation in stochastic olg games abstract this paper builds on cremer s quart j econ 101 1986 33 seminal analysis which shows that almost complete cooperation can be achieved as an equilibrium in a game played by overlapping generations of players if the institution in which players cooperate is infinitely lived we analyze a similar model in which the costs of cooperation are subject to random shocks even if these random shocks are very small the range of parameters for which cooperation can be sustained is decreased considerably in comparison to the deterministic case furthermore we show how the efficient outcome can be approximated if the level of cooperation can be varied continuously and the cooperation technology has decreasing or constant returns to scale while this is not possible in the case of increasing returns to scale

optimal private good allocation the case for a balanced budget abstract in an independent private value auction environment we are interested in strategy proof mechanisms that maximize the agents residual surplus that is the utility derived from the physical allocation minus transfers accruing to an external entity we find that under the assumption of an increasing hazard rate of type distributions an optimal deterministic mechanism never extracts any net payments from the agents that is it will be budget balanced specifically optimal mechanisms have a simple posted price or option form in the bilateral trade environment we obtain optimality of posted price mechanisms without any assumption on type distributions

repeated games played by overlapping generations of players the present paper tries to explain cooperative behaviour in an organization run by a sequence of long but finitely lived agents we show that the folk theorem holds for infinitely repeated games with overlapping generations of finitely lived players any mutually beneficial outcome can approximately be sustained if the player s life span and the overlapping periods are long enough the result is stronger than the usual folk theorems in that it employs no assumption on the stage game such as the full dimensionality of payoff set or multiplicity of equilibria

long run purchasing power parity during the recent float abstract this paper examines the relevance of long run purchasing power parity ppp which allows for measurement errors during the recent floating exchange rate period previous empirical studies generally fail to find support for long run ppp over this period in this paper in this paper the cointegration property of exchange rates and prices is examined using maximum likelihood procedure and we find significant evidence favorable to long run ppp further tests for symmetry and proportionality indicate that these two conditions are not generally with the data the results support the hypothesis of long run ppp with measurement errors in prices

banking on currency forecasts how predictable is change in money abstract the paper examines the predictive performance of four structural exchange rate models using both parametric and nonparametric techniques error correction versions of the models are fit so that plausible long run elasticities can be imposed on the fundamental variables of each model a variety of model evaluation statistics are reported our findings confirm that fundamental exchange rate models forecast no better than a random walk model for short term prediction horizons for longer horizons error correction terms can explain exchange rate movements significantly better than a no change forecast for a subset of the models and currencies we consider

intertemporal transfer institutions abstract we consider a single commodity overlapping generations model where at a cost institutions can be created or transformed to carry out intergenerational transfers we analyze the game with both strategic and cooperative methods characterizing the unique stationary equilibrium as well as the set of transfer institutions that belong to the core which we show to coincide with the consistent core we conclude that as long as the creation of an institution is costly it is possible to sustain positive transfers though those will be below the optimal level moreover the lower the costs the more efficient the transfer will be journal of economic literature classification numbers c71 c72 d23 e21 h55

a general characterization of interim efficient mechanisms for independent linear environments we consider the class of bayesian environments with independent types and utility functions which are both quasi linear in a private good and linear in a one dimensional private value type parameter we call these independent linear environments for these environments we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual rationality constraints we also prove that they correspond to decision rules based on virtual surplus maximization together with the appropriate incentive taxes we illustrate these techniques with applications to auction design and public good provision

lottery or waiting line auction abstract this paper studies the efficiencies of the two most widely used non price allocation mechanisms lotteries and waiting line auctions as our analysis suggests in addition to the fairness of the mechanism the use of lotteries in lieu of waiting line auctions can be also justified from an efficiency point of view in particular we show that the less dispersed consumers time valuations are the more efficient is a lottery relative to a waiting line auction in addition we identify four conditions under which a lottery dominates a waiting line auction in expected social surplus preserving furthermore the numerical simulations we conduct indicate that over a predominantly wide range of circumstances a lottery is more socially efficient than a waiting line auction as an allocative mechanism in the absence of a conventional price system