What Money Can't Buy: Allocations with Priority Lists, Lotteries and Queues

Abstract

I study the welfare optimal allocation of a number of identical and indivisible objects to a set of heterogeneous risk-neutral agents under the hypothesis that money is not available. Agents have independent private values, which represent the maximum time that they are willing to wait in line to obtain a good. A priority list, which ranks agents according to their expected values, is optimal when hazard rates of the distributions of values are increasing. Queues, which allocates the object to those who wait in line the longest, are optimal in a symmetric setting with decreasing hazard rates.

Cardinal Bayesian allocation mechanisms without transfers

“…the distributions of the valuations for each object, are identical. 11 Each agent i learns the realization of her valuation vector v i only, according to the independent private valuations assumption. The planner only knows the prior distribution from which all valuations are drawn.…”

A preference-based, multi-unit auction for pricing and capacity allocation

“…Auctions, as a market mechanism, have long been a common method for business transactions, and they are being increasingly used in price discovery and discrimination for selling diverse items ranging from artworks to billion-dollar spectrum licenses for radio or mobile telephony, wireless networks, and emission permits (Ausubel, 2003;Krishna, 2009). However, particularly in the allocation of certain public goods, the pertinent political and social constraints can restrict institutions from pursuing self-serving policies (Condorelli, 2009). In such cases non-price mechanisms, such as lotteries, priority lists, and queuing rules, can be used to address the fairness and equity expectations of the stakeholders involved in the allocation process.…”