The Revealed Preference Theory of Aggregate Object Allocations

Umutcan Salman ()
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Umutcan Salman: University of Padova

No 324, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

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.

Keywords: : Aggregate object allocation; Pareto Efficiency; Individual Rationality; Revealed preferences; Matroid theory (search for similar items in EconPapers)
Pages: 21 pages
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