Pseudomarkets with Priorities in Large Random Assignment Economies
AbstractI study large random assignment economies with a continuum of agents and a finite number of object types. I consider the existence of weak priorities discriminating among agents with respect to their rights concerning the final assignment. The respect for priorities ex ante (ex-ante stability) usually precludes ex-ante envy-freeness. Therefore I defi ne a new concept of fairness, called no unjustifi ed lower chances: priorities with respect to one object type cannot justify different achievable chances regarding another object type. This concept, which applies to the assignment mechanism rather than to the assignment itself, implies ex-ante envy-freeness among agents of the same priority type. I propose a variation of Hylland and Zeckhauser's (1979) pseudomarket that meets ex-ante stability, no unjustifi ed lower chances and ex-ante efficiency among agents of the same priority type. Assuming enough richness in preferences and priorities, the converse is also true: any random assignment with these properties could be achieved through an equilibrium in a pseudomarket with priorities. If priorities are acyclical (the ordering of agents is the same for each object type), this pseudomarket achieves ex-ante efficient random assignments.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 537.
Date of creation: Mar 2011
Date of revision:
Random Assignment; Fairness; Stability; School Choice;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
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