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Efficient Market Design with Distributional Objectives

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Listed:
  • Isa E. Hafalir
  • Fuhito Kojima
  • M. Bumin Yenmez

Abstract

Given an initial matching and a policy objective on the distribution of agent types to institutions, we study the existence of a mechanism that weakly improves the distributional objective and satisfies constrained efficiency, individual rationality, and strategy-proofness. We show that such a mechanism need not exist in general. We introduce a new notion of discrete concavity, which we call pseudo M$^{\natural}$-concavity, and construct a mechanism with the desirable properties when the distributional objective satisfies this notion. We provide several practically relevant distributional objectives that are pseudo M$^{\natural}$-concave.

Suggested Citation

  • Isa E. Hafalir & Fuhito Kojima & M. Bumin Yenmez, 2022. "Efficient Market Design with Distributional Objectives," Papers 2301.00232, arXiv.org, revised Mar 2023.
    • Handle: RePEc:arx:papers:2301.00232
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    References listed on IDEAS

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    1. Federico Echenique & M. Bumin Yenmez, 2015. "How to Control Controlled School Choice," American Economic Review, American Economic Association, vol. 105(8), pages 2679-2694, August.
    2. Ehlers, Lars & Hafalir, Isa E. & Yenmez, M. Bumin & Yildirim, Muhammed A., 2014. "School choice with controlled choice constraints: Hard bounds versus soft bounds," Journal of Economic Theory, Elsevier, vol. 153(C), pages 648-683.
    3. , Emin & , Bumin & , Ali, 2013. "Effective affirmative action in school choice," Theoretical Economics, Econometric Society, vol. 8(2), May.
    4. Yuichiro Kamada & Fuhito Kojima, 2015. "Efficient Matching under Distributional Constraints: Theory and Applications," American Economic Review, American Economic Association, vol. 105(1), pages 67-99, January.
    5. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    6. Ashutosh Thakur, 2021. "Matching in the Civil Service: A Market Design Approach to Public Administration and Development," ECONtribute Discussion Papers Series 087, University of Bonn and University of Cologne, Germany.
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