Flexible Multi-unit Exchange: Theory and An Application to Blood Allocation with Replacement Donors

Abstract

In 55 countries, volunteer, non-remunerated donations meet less than 22% of blood demand, necessitating replacement donor programs that exchange patients’ donors for transfusions. Current first-come, first-served practices are inefficient, as they preclude beneficial exchanges among patients. We introduce feasible schedule menus — a novel concept that enables flexible exchange rates — and propose weighted utilitarian mechanisms that accommodate efficiency and fairness objectives when patients value transfusions monotonically and incur donor-provision costs. Under suitable menus, these mechanisms are incentive compatible for donor revelation; priority mechanisms — a subclass that includes maximal mechanisms — also ensure incentive compatibility for utility function revelation.

Keywords: Multi-unit exchange, compatibility-based preferences, blood transfusion, endogenous pricing, market design

JEL Classification: D47, C78, D82, D78, I19