Pareto-Optimal Matching Allocation Mechanisms for Boundedly Rational Agents

Sophie Bade ()
Additional contact information
Sophie Bade: Max Planck Institute for Research on Collective Goods, Bonn

No 2010_47, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This article is concerned with the welfare properties of trade when the behavior of agents cannot be rationalized by preferences. I investigate this question in an environment of matching allocation problems. There are two reasons for doing so: rstly, the niteness of such problems entails that the domain of the agents' choice behavior does not need to be restricted in any which way to obtain results on the welfare properties of trade. Secondly, some matching allocation mechanisms have been designed for non-market environments in which we would typically expect boundedly rational behavior. I nd quali ed support for the statements that all outcomes of trade are Pareto-optimal and all Pareto optima are reachable through trade. Contrary to the standard case, di erent trading mechanisms lead to di erent outcome sets when the agents' behavior is not rationalizable. These results remain valid when restricting attention to \minimally irrational" behavior.

Keywords: Bounded Rationality; House Allocation Problems; Fundamental Theorems of Welfare; Multiple Rationales (search for similar items in EconPapers)
JEL-codes: C78 D03 D60 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.coll.mpg.de/pdf_dat/2010_47online.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2010_47

Access Statistics for this paper

More papers in Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods Contact information at EDIRC.
Bibliographic data for series maintained by Marc Martin ().