Axiomatic and Strategic Analysis of Allocation: Theory and Applications

University Of Rochester, Rochester NY

Investigators

Abstract

The aim of this project is the identification and the construction of allocation rules enjoying properties of fairness and non-manipulability. Central to the study are the following: all agents benefit from an enlargement of resources held in common, more generally of opportunities open to society as a whole; each agent benefits from an enlargement of his endowment, or of his productivity; the welfare of all agents is affected in the same direction by changes in the environment over which no one in particular has control (they all gain or they all lose as a result of the change); the arrival of additional agents, when it is socially costly, implies a welfare loss for all agents initially present; the desirability of an allocation is not affected by the departure of some agents with their assignments; finally, if for two economies having a group of agents in common, two allocations are chosen at which these agents receive the same aggregate resource, then each of them individually receives the same thing in both. The strategic component of the program focuses on the requirement that agents should never gain by misrepresenting the information they control, and it includes related properties of implementability in the face of incomplete information. The possible applications of our allocation problem are the following: dividing a resource as a function of claims agents have on it (equivalently, assessing tax liabilities as a function of individual resources agents control); allocating the cost of a public facility when agents' needs are nested and when the facility has to be built so as to accommodate the agents with the greatest need (exemplified by the so-called ``airport" problem); allocating the cost of a public facility when agents' needs overlap, such as when they are distributed in space (businesses along a road) or time (overlapping generations); allocating the cost of a network, such as a road network or an electrical network; allocating a service over time (sequencing and scheduling); allocating private goods in standard economies.