A New Ex-Ante Efficiency Criterion and Implications for the Probabilistic Serial Mechanism
34 Pages Posted: 11 May 2016 Last revised: 19 Dec 2017
Date Written: December 18, 2017
We introduce and analyze an efficiency criterion for probabilistic assignment of objects, when only ordinal preference information is available. This efficiency criterion is based on the following domination relation: a probabilistic assignment dominates another assignment if it is ex-ante efficient for a strictly larger set of utility profiles consistent with the ordinal preferences. We provide a simple characterization of this domination relation. We revisit an extensively studied assignment mechanism, the Probabilistic Serial mechanism (Bogomolnaia and Moulin, 2001), which always chooses a “fair” assignment. We show that the Probabilistic Serial assignment may be dominated by another fair assignment. We provide conditions under which the serial assignment is undominated among fair assignments.
Keywords: Ex-Ante Efficiency, Probabilistic Assignment, Fairness, Probabilistic Serial Mechanism
JEL Classification: C60, C71, C78, D61
Suggested Citation: Suggested Citation