Allocation Mechanisms with Mixture-Averse Preferences

David Dillenberger () and Uzi Segal ()
Additional contact information
David Dillenberger: University of Pennsylvania
Uzi Segal: Boston College

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: Consider an economy with equal amounts of N types of goods,to be allocated to agents with strict quasi-convex preferences over lotteries. We show that ex-ante, all feasible and Pareto efficient allocations give almost all agents a binary lottery. Therefore, even if all preferences are the same, some identical agents necessarily receive different lotteries. Our results imply that many of the popular allocation mechanisms used in practice are not ex-ante efficient. Assuming the reduction of compound lotteries axiom, social welfare deteriorates by first randomizing over these binary lotteries. Full ex-ante equality can be achieved if agents satisfy the compound independence axiom.

Keywords: Allocation Problem; Binary Lotteries; Ex-Ante Efficiency; Matching; No-Envy; Non-Expected Utility; Quasi-Convex Preferences (search for similar items in EconPapers)
JEL-codes: C78 D61 D81 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://economics.sas.upenn.edu/system/files/worki ... per%20Submission.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

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:pen:papers:24-006

Access Statistics for this paper

More papers in PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 133 South 36th Street, Philadelphia, PA 19104. Contact information at EDIRC.
Bibliographic data for series maintained by Administrator ().