American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
How to Allocate Money?
American Economic Journal: Microeconomics
(pp. 312–39)
Abstract
I study a simple equity-efficiency problem: A designer allocates a fixed amount of money to a population of agents differing in privately observed marginal values for money. She can only screen by imposing an "ordeal"—that is, by allocating more money to agents who engage in a socially wasteful activity (such as queuing or filling out forms). Giving a lump-sum transfer is outperformed by an ordeal mechanism when agents with the lowest money-denominated cost of engaging in the wasteful activity have an expected value for money that exceeds the average value by more than a factor of two.Citation
Dworczak, Piotr. 2026. "How to Allocate Money?" American Economic Journal: Microeconomics 18 (1): 312–39. DOI: 10.1257/mic.20230263Additional Materials
JEL Classification
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D82 Asymmetric and Private Information; Mechanism Design
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs