Efficient assignment mechanisms for liquidity-constrained agents

• Autores: Yeon-Koo Che, Ian Gale, Jinwoo Kim
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 31, Nº. 5, 2013, págs. 659-665
• Idioma: inglés
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• Resumen

  • We study alternative methods of assigning scarce resources to individuals who may be liquidity-constrained. Selling the resources via auctions is increasingly popular, but that method may produce an inefficient allocation when agents are liquidity constrained. A simple non-market scheme such as random assignment does better, if resale is allowed, since individuals with a high valuation but low liquidity are more likely to be assigned initially, and recipients with low valuations will resell to those with high valuations. Similarly, a need-based assignment scheme favoring those with low liquidity enhances welfare. Lotteries with entry fees could also be desirable. The optimal mechanism displays features of the non-market schemes such as in-kind and cash subsidies.