Who Cares More? Allocation with Diverse Preference Intensities / Pietro Ortoleva, Evgenii Safonov, Leeat Yariv.

Format:

Book

Author/Creator:

Ortoleva, Pietro.

Contributor:

National Bureau of Economic Research.

Safonov, Evgenii.

Yariv, Leeat.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29208.

NBER working paper series no. w29208

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

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 when individual preferences are known and when they are not. 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 discuss a market-based alternative and show how it differs.

Notes:

Print version record

September 2021.