Assigning Resources to Budget-Constrained Agents

This article studies different methods of assigning a good to budget-constrained agents. Schemes that assign the good randomly and allow resale may outperform the competitive market in terms of Utilitarian efficiency. The socially optimal mechanism involves random assignment at a discount--an in-kind subsidy--and a cash incentive to discourage low-valuation individuals from claiming the good. Copyright , Oxford University Press.