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The Revealed Preference Theory of Aggregate Object Allocations

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  • Umutcan Salman

    (University of Padova)

Abstract

We develop a revealed preference framework to test whether an aggregate allocation of indivisible objects satisfies Pareto efficiency and individ- ual rationality (PI) without observing individual preferences. Exploiting the type-based preferences of Echenique et al. (2013), we derive necessary and sufficient conditions for PI-rationalizability. We show that an allocation is PI-rationalizable if and only if its allocation graph is acyclic, and equivalently if its associated bipartite graph contains no alternating cycles. The bipartite representation admits a matroid structure, enabling a simple greedy algorithm to measure the severity of PI violations and identify the minimal set of individual–object assignments whose removal restores rationalizability. Our results yield the first complete revealed preference test for PI in matching markets and provide an implementable tool for empirical applications.

Suggested Citation

  • Umutcan Salman, "undated". "The Revealed Preference Theory of Aggregate Object Allocations," "Marco Fanno" Working Papers 0324, Dipartimento di Scienze Economiche "Marco Fanno".
    • Handle: RePEc:pad:wpaper:0324
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    References listed on IDEAS

    as
    1. Demuynck, Thomas & Salman, Umutcan, 2022. "On the revealed preference analysis of stable aggregate matchings," Theoretical Economics, Econometric Society, vol. 17(4), November.
    2. Federico Echenique & Sangmok Lee & Matthew Shum & M. Bumin Yenmez, 2013. "The Revealed Preference Theory of Stable and Extremal Stable Matchings," Econometrica, Econometric Society, vol. 81(1), pages 153-171, January.
    3. Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
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