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A Pseudo-Market Approach to Allocation with Priorities†

A Pseudo-Market Approach to Allocation with Priorities† AbstractWe propose a pseudo-market mechanism for no-monetary-transfer allocation of indivisible objects based on priorities such as those in school choice. Agents are given token money, face priority-specific prices, and buy utility-maximizing random assignments. The mechanism is asymptotically incentive compatible, and the resulting assignments are fair and constrained Pareto efficient. Hylland and Zeckhauser’s (1979) position-allocation problem is a special case of our framework, and our results on incentives and fairness are also new in their classical setting. (JEL D63, D82, H75, I21, I28) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

A Pseudo-Market Approach to Allocation with Priorities†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20150259
Publisher site
See Article on Publisher Site

Abstract

AbstractWe propose a pseudo-market mechanism for no-monetary-transfer allocation of indivisible objects based on priorities such as those in school choice. Agents are given token money, face priority-specific prices, and buy utility-maximizing random assignments. The mechanism is asymptotically incentive compatible, and the resulting assignments are fair and constrained Pareto efficient. Hylland and Zeckhauser’s (1979) position-allocation problem is a special case of our framework, and our results on incentives and fairness are also new in their classical setting. (JEL D63, D82, H75, I21, I28)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Aug 1, 2018

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