Pietro Ortovela from Princeton University will present “Who Cares More? Allocation with Diverse Preference Intensities” (with Evgenii Safonov and Leeat Yariv)

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Abstract:

Goods and services---public housing, medical appointments, schools---are often allocated to individuals who rank them similarly but differ in their

preference intensities. We characterize optimal allocation rules in such settings, considering both the case in which individual preferences are known and ones in which they need to be elicited. Several insights emerge. First-best allocations may involve allocating to some agents lotteries between very high-ranked and very low-ranked goods. When preference intensities are draft information, second-best allocations always involve such lotteries and, crucially, may coincide with first-best allocations. Second-best allocations may also entail disposal of services. We also discuss a market-based alternative approach and show how it differs.