113. Efficiency and Fairness in Resource Allocation: The Role of Outside Options
Invited abstract in session TA-8: Technology, Trust, and Tensions: Strategic Behavior in Supply Chains, stream Game Theory and Behavioral Management Science.
Thursday, 8:45-10:15Room: H8
Authors (first author is the speaker)
| 1. | Andreas Gernert
|
| Kuehne Logistics University | |
| 2. | Thomas Breugem
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| Humanitarian Research Group, INSEAD |
Abstract
Persistent drug shortages in Europe have prompted many countries to adopt national stockpiling strategies, prioritizing autonomy over collaboration. While this ensures access for some, it risks exacerbating inequities across the region. In response, the European Commission has proposed centrally managed cross-national stockpiling to promote both efficiency and fairness. However, cooperation is viable only if countries find the joint allocation preferable to their outside options. We study this challenge through a general resource allocation model where a principal allocates resources among agents with outside options. We analyze how these constraints reshape the efficiency-fairness trade-off; specifically, the price of fairness (the efficiency loss from imposing fairness), and the loss of fairness (how outside options reduce the welfare of the least well-off). Applying the model to medicine stockpiling, we offer actionable insights for equitable and stable policy design.
Keywords
- Multi-Objective Decision Making
- Robust Optimization
Status: accepted
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