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Fairness and efficiency for allocations with participation constraints

Echenique, Federico and Miralles, Antonio and Zhang, Jun (2021) Fairness and efficiency for allocations with participation constraints. Journal of Economic Theory, 195 . Art. No. 105274. ISSN 0022-0531. doi:10.1016/j.jet.2021.105274.

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We propose a notion of fairness for allocation problems in which different agents may have different reservation utilities, stemming from different outside options, or property rights. Fairness is usually understood as the absence of envy, but this can be incompatible with reservation utilities. It is possible that Alice's envy of Bob's assignment cannot be remedied without violating Bob's participation constraint. Instead, we seek to rule out justified envy, defined as envy for which a remedy would not violate any agent's participation constraint. We show that fairness, meaning the absence of justified envy, can be achieved together with efficiency and individual rationality. We introduce a competitive equilibrium approach with price-dependent incomes obtaining the desired properties.

Item Type:Article
Related URLs:
URLURL TypeDescription Paper ItemWorking Paper
Echenique, Federico0000-0002-1567-6770
Miralles, Antonio0000-0001-8146-2140
Zhang, Jun0000-0003-4154-3741
Alternate Title:Fairness and efficiency for probabilistic allocations with endowments, Fairness and efficiency for probabilistic allocations with participation constraints
Additional Information:© 2021 Elsevier Inc. Received 9 May 2020, Revised 24 April 2021, Accepted 4 May 2021, Available online 14 May 2021. We thank Eric Budish, Fuhito Kojima, Andy McLennan, Hervé Moulin, and Tayfun Sönmez for comments. We are grateful to an associate editor and two anonymous referees for their comments and suggestions on an earlier draft. Echenique thanks the National Science Foundation for its support through the grants SES-1558757 and CNS-1518941. Miralles acknowledges financial support from the Spanish Ministry of Economy and Competitiveness (ECO2017-83534-P) the Catalan Government (2017 SGR 711) and the Severo Ochoa Programme (SEV-2015-0563). Zhang thanks the financial support from the National Natural Science Foundation of China (Grant 71903093 and 72033004).
Funding AgencyGrant Number
Ministerio de Economía, Industria y Competitividad (MINECO)ECO2017-83534-P
Catalan Government2017 SGR 711
Severo OchoaSEV-2015-0563
National Natural Science Foundation of China71903093
National Natural Science Foundation of China72033004
Subject Keywords:Fairness; Justified envy; Efficiency; Participation constraint; Pseudo-market equilibrium
Classification Code:JEL: C71; C78; D71
Record Number:CaltechAUTHORS:20210303-151951189
Persistent URL:
Official Citation:Federico Echenique, Antonio Miralles, Jun Zhang, Fairness and efficiency for allocations with participation constraints, Journal of Economic Theory, Volume 195, 2021, 105274, ISSN 0022-0531, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:108297
Deposited By: Tony Diaz
Deposited On:04 Mar 2021 00:14
Last Modified:06 Jul 2021 21:28

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