Equity-efficiency trade-off in quasi-linear environments

Piotr Dworczak

No 70, GRAPE Working Papers from GRAPE Group for Research in Applied Economics

Abstract: I study a simple equity-efficiency problem: A designer allocates a fixed amount of money to a population of agents differing in privately observed marginal values for money. She can only screen agents by asking them to burn utility (through some socially wasteful activity). I show that giving a lump-sum payment is outperformed by a mechanism with utility burning when the agent with the lowest money-denominated cost of engaging in the wasteful activity has an expected value for money that exceeds the average value by more than a factor of two.

JEL-codes: C78 D47 D61 D63 D82 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2022
New Economics Papers: this item is included in nep-des, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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