Events at CERGE-EI

Speaker: Achim Wambach (This email address is being protected from spambots. You need JavaScript enabled to view it.)

Title: "Constraints on Matching Markets Based on Moral Concerns (joint work with Katharina Huesmann)"

Abstract:
In many markets, monetary transfers are banned to ensure that the wealthy do not have disproportionate access to goods. This study discusses whether transfer bans adequately accomplish this goal. We consider an assignment problem in which agents have heterogeneous wealth endowments and their preferences exhibit positive income effects. As an alternative to a transfer ban, we introduce the constraint of discrimination-freeness, which requires goods to be allocated independently of the agents’ wealth endowments. We show that when wealth inequality is high, a market designer constrained by discrimination-freeness faces the same restrictions for implementation as one constrained by a transfer ban. When wealth inequality is low, the results differ. There may exist discrimination-free allocations that are not implementable without transfers. We note that if bribery is possible—i.e., if money can be used outside of the primary market mechanism—then a transfer ban might not suffice to eliminate discrimination.