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Information processing for a finite resource allocation mechanism

  • Purdue University
  • University of Texas at Austin

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

We deal with an 'organization' having m individual agents (the 'agents') and one central agent or agency (the 'coordinator'), and the problem of allocating a fixed supply of n commodities among the agents. The coordinator wishes to distribute the commodities in such a way as to maximize an objective function whose arguments are functions known (implicitly) to the individual agents, but not to the coordinator. The more information the coordinator obtains about the individual agents' functions, the better the allocation decision he or she can make; however, gaining such information is costly, so that the coordinator must balance the potential gain against the cost of acquiring additional information. We find a 'satisficing' solution to this problem which is computable and which terminates in a finite number of steps.

Original languageEnglish
Pages (from-to)267-290
Number of pages24
JournalEconomic Theory
Volume8
Issue number2
DOIs
StatePublished - 1996

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