Title

Who Cares More? Allocation with Diverse Preference Intensities

Author(s)

Pietro Ortoleva Pietro Ortoleva (Princeton University)

Evgenii Safonov Evgenii Safonov (Princeton University)

Leeat Yariv Leeat Yariv (Princeton University)

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 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.

Creation Date

2021-08

Section URL ID

Paper Number

2021-10

URL

http://pietroortoleva.com/papers/WhoCaresMore.pdf

File Function

Jel

C78, D02, D47

Keyword(s)

: Market Design, Mechanism Design, Allocation Problems

Suppress

false

Series

13