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Large vs. Continuum Assignment Economies: Efficiency and Envy-Freeness

Antonio Miralles and Marek Pycia

No 950, Working Papers from Barcelona Graduate School of Economics

Abstract: Continuum models are often used to study large finite assignment economies. However, some subtleties must be taken into account. We show that in the large finite random assignment problem without transfers, Competitive Equilibrium with vanishing income differences does not asymptotically characterize the set of efficient and envy-free random assignment profiles. This is in sharp contrast with the continuum model counterpart (Ashlagi and Shi, 2015). The problem is driven by the failure of local non-satiation inherent in no-transfer assignment.

Keywords: random assignments; efficiency; envy-freeness; convergence failure; competitive equilibrium from equal incomes (search for similar items in EconPapers)
JEL-codes: D47 D61 D63 (search for similar items in EconPapers)
Date: 2017-01
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