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Fairness and efficiency for probabilistic allocations with participation constraints

Echenique, Federico and Miralles, Antonio and Zhang, Jun (2019) Fairness and efficiency for probabilistic allocations with participation constraints. . (Unpublished)

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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 {\em 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:Report or Paper (Discussion Paper)
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
Additional Information:We thank Eric Budish, Fuhito Kojima, Andy McLennan, Herv´e Moulin, and Tayfun Sönmez for comments. 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).
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
Record Number:CaltechAUTHORS:20210303-151951189
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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:04 Mar 2021 00:14

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