Dynamic Allocation of Objects to Queuing Agents: The Discrete Model

This paper analyzes the optimal allocation of objects which arrive sequentially to agents organized in a waiting list. Applications include the assignment of social housing, deceased donor organs and daycare slots. A mechanism is a probability distribution over all priority orders which are consistent with the waiting list. We consider three efficiency criteria: first order stochastic dominance in the vector of agents’ values, the probability of misallocation and the expected waste. We show that the strict seniority order dominates uniform random order according to the two first criteria, and the uniform random order dominates strict priority according to the third criterion. If agents values are perfectly correlated, strict priority dominates all other probabilistic mechanisms for all agents values. JEL Classification Numbers: C78, D83, R31