Should We Use Lotteries To Allocate Scarce Resources?

Why is this important?

Consider, for example, access to public-subsidized in-vitro fertilization therapy. Should couples be allowed to have repeated access to the chance of receiving a child, if they have already “won” once? Our results add to those of some others (Walker & Siegel, 2002) who suggest that there might be strongly felt preferences for similar allocation design choices.”

Abstract (via SJDM)

Marco D. Huesch
Department of Community & Family Medicine
Duke University School of Medicine

Richard Brady
Department of Economics
Duke University

Unbiased lotteries seem the least unfair and simplest procedures to allocate scarce indivisible resources to those with equal claims. But, when lotteries are repeated, it is not immediately obvious whether prior winners should be included or excluded. As in design questions surrounding single-shot lotteries, considerations of self-interest and distributive social preferences may interact. We investigate preferences for allowing participation of earlier winners in sequential lotteries. We found a strong preference for exclusion, both in settings where subjects were involved, and those where they were not. Subjects who answered questions about both settings did not differ in their tendency to prefer exclusion. Stated rationales significantly predicted choice but did not predict switching of choices between the two settings.

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30. August 2010 by Miguel Barbosa
Categories: Curated Readings, Finance & Investing | Leave a comment

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