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Fairness and efficiency for probabilistic allocations with endowments

Echenique, Federico and Zhang, Jun and Miralles, Antonio (2018) Fairness and efficiency for probabilistic allocations with endowments. Social Science Working Paper, 1434R. California Institute of Technology , Pasadena, CA. (Unpublished)

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We propose to use endowments as a policy instrument in market design. Endowments give agents the right to enjoy certain resources. For example in school choice, one can ensure that low-income families have a shot at high-quality schools by endowing them with a chance of admission. We introduce two new criteria in resource allocation problems with endowments. The first adapts the notion of justified envy to a model with endowments, while the second is based on market equilibrium. Using either criteria, we show that fairness (understood as the absence of justified envy, or as a market outcome) can be obtained together with efficiency and individual rationality.

Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription ItemDiscussion Paper
Echenique, Federico0000-0002-1567-6770
Zhang, Jun0000-0003-4154-3741
Miralles, Antonio0000-0001-8146-2140
Additional Information:Original paper (20 p.) submitted December 2017. Revised January 2018, with 3rd author added (Antonio Miralles). Social Science Working Paper 1434R.
Group:Social Science Working Papers
Subject Keywords:School choice; fairness; justified envy; Walrasian equilibrium; Knaster-Kuratowski-Mazurkiewicz Lemma
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Other Numbering System NameOther Numbering System ID
Social Science Working Paper1434
Series Name:Social Science Working Paper
Issue or Number:1434R
Classification Code:JEL: D47,D50
Record Number:CaltechAUTHORS:20191018-122601583
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:99372
Deposited By: Katherine Johnson
Deposited On:18 Oct 2019 19:35
Last Modified:03 Mar 2021 23:21

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