Pietro ORTOLEVA (Princeton) – ” Who Cares More ”

Abstract: Goods and services—public housing, medical appointments, schools—are often allocated to individuals who rank them similarly but differ in their preference intensities. We characterize optimal allocation rules in such settings, considering both the case in which individual preferences are known and ones in which they need to be elicited. Several insights emerge. First-best allocations may involve assigning some agents lotteries between high- and low-ranked goods. When preference intensities are private information, second-best allocations always involve such lotteries and, crucially, may coincide with first-best allocations. Furthermore, second-best allocations may entail disposal of services. We also discuss a market-based alternative approach and show how it differs. Joint with Evgenii Safonov and Leeat Yariv.

 

Organizers:
Roxana Fernandez Machado (CREST), Julien Combe (CREST), and Matias Nunez (CREST)
Sponsors:
CREST