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What money can't buy: allocations with priority lists, lotteries and queues

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  • Daniele Condorelli

Abstract

I study the welfare optimal allocation of a number of identical and indivisible objects to a set of heterogeneous risk-neutral agents under the hypothesis that money is not available. Agents have independent private values, which represent the maximum time that they are will- ing to wait in line to obtain a good. A priority list, which ranks agents according to their expected values, is optimal when hazard rates of the distributions of values are increasing. Queues, which allocates the ob- ject to those who wait in line the longest, are optimal in a symmetric setting with decreasing hazard rates.

Suggested Citation

  • Daniele Condorelli, 2009. "What money can't buy: allocations with priority lists, lotteries and queues," Discussion Papers 1482, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1482
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    File URL: http://www.kellogg.northwestern.edu/faculty/condorelli/WMCB.pdf
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    References listed on IDEAS

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    1. McAfee, R Preston & McMillan, John, 1992. "Bidding Rings," American Economic Review, American Economic Association, pages 579-599.
      • McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers 726, California Institute of Technology, Division of the Humanities and Social Sciences.
    2. Michael Finus & Pedro Pintassilgo, 2012. "International environmental agreements under uncertainty: does the 'veil of uncertainty' help?," Oxford Economic Papers, Oxford University Press, pages 736-764.
    3. Chakravarty, Surajeet & Kaplan, Todd R., 2013. "Optimal allocation without transfer payments," Games and Economic Behavior, Elsevier, pages 1-20.
    4. Holt, Charles A, Jr & Sherman, Roger, 1982. "Waiting-Line Auctions," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 280-294, April.
    5. Kiho Yoon, 2009. "Mechanism Design with Expenditure Consideration," Discussion Paper Series 0903, Institute of Economic Research, Korea University.
    6. Taylor, Grant A. & Tsui, Kevin K. K. & Zhu, Lijing, 2003. "Lottery or waiting-line auction?," Journal of Public Economics, Elsevier, pages 1313-1334.
    7. Yoon, Kiho, 2011. "Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 670-676.
    8. Winston Koh & Zhenlin Yang & Lijing Zhu, 2006. "Lottery Rather than Waiting-line Auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(2), pages 289-310, October.
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    Cited by:

    1. Condorelli, Daniele, 2013. "Market and non-market mechanisms for the optimal allocation of scarce resources," Games and Economic Behavior, Elsevier, vol. 82(C), pages 582-591.
    2. Yoon, Kiho, 2011. "Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 670-676.
    3. Ron Siegel, 2010. "Asymmetric Contests with Conditional Investments," American Economic Review, American Economic Association, pages 2230-2260.

    More about this item

    Keywords

    rationing; queues; priority lists; lotteries.;

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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