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Allocating Uncertain and Unresponsive Resources

Banks, Jeffrey S. and Ledyard, John O. and Porter, David (1988) Allocating Uncertain and Unresponsive Resources. Social Science Working Paper, 680. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20170906-135234942

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Abstract

We identify an important class of economic problems that arise naturally in several applications: the allocation of multiple resources when there are uncertainties in demand or supply, unresponsive supplies (no inventories and fixed capacities), and significant demand indivisibilities (rigidities). Examples of such problems include scheduling job shops, airports or super-computers, zero-inventory planning, and the allocation and pricing of NASA's planned Space Station. We show that the two most common organizations used to deal with this problem, markets and administrative procedures, can perform at very low efficiencies (60-65percent efficiency in a seemingly robust example). Thus, there is a need to design new mechanisms that more efficiently allocate resources in these environments. We develop and analyze two that arise naturally from auctions used in the allocation of single dimensional goods. These new mechanisms involve computer assisted coordination made possible by the existence of networked computers. Both mechanisms significantly improve on the performance of both administrative and market procedures.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20160525-065131499Related ItemPublished Version
Additional Information:This work was partially funded by Caltech and NASA-JPL. We thank them for their support. They are not responsible for the content. We thank Peter Gray and Mark Olson for computer programming assistance. We also thank Charles Plott, Jim Quirk and Stan Reiter for helpful insights and discussions. This paper represents a major revision of our earlier 1987 paper. All the material on markets is new as are some of the conclusions. Published as Banks, Jeffrey S., John O. Ledyard, and David P. Porter. "Allocating uncertain and unresponsive resources: An experimental approach." The Rand journal of economics (1989): 1-25.
Group:Social Science Working Papers
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NASA/JPL/CaltechUNSPECIFIED
Record Number:CaltechAUTHORS:20170906-135234942
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170906-135234942
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81195
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Deposited By: Jacquelyn Bussone
Deposited On:06 Sep 2017 22:07
Last Modified:06 Sep 2017 22:07

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