On the Efficiency-Fairness Trade-off

Dimitris Bertsimas (), Vivek F. Farias () and Nikolaos Trichakis ()
Additional contact information
Dimitris Bertsimas: MIT Sloan School of Management and Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Vivek F. Farias: MIT Sloan School of Management and Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Nikolaos Trichakis: Harvard Business School, Harvard University, Boston, Massachusetts 02163

Management Science, 2012, vol. 58, issue 12, 2234-2250

Abstract: This paper deals with a basic issue: How does one approach the problem of designing the "right" objective for a given resource allocation problem? The notion of what is right can be fairly nebulous; we consider two issues that we see as key: efficiency and fairness. We approach the problem of designing objectives that account for the natural tension between efficiency and fairness in the context of a framework that captures a number of resource allocation problems of interest to managers. More precisely, we consider a rich family of objectives that have been well studied in the literature for their fairness properties. We deal with the problem of selecting the appropriate objective from this family. We characterize the trade-off achieved between efficiency and fairness as one selects different objectives and develop several concrete managerial prescriptions for the selection problem based on this trade-off. Finally, we demonstrate the value of our framework in a case study that considers air traffic management. This paper was accepted by Yossi Aviv, operations management.

Keywords: programming; nonlinear; theory; decision analysis; multiple criteria; games-group decisions; bargaining; fairness (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.1120.1549 (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:inm:ormnsc:v:58:y:2012:i:12:p:2234-2250

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().