Distributional Preferences for Market Design

TL;DR

This paper introduces a comprehensive framework for integrating distributional preferences into market design, ensuring desirable properties and providing unified foundations for various policies.

Contribution

It develops a general, axiomatic framework that encompasses existing models and extends to complex distributional objectives in market design.

Findings

Greedy rule maximizes distributional preferences in decentralized markets.

Deferred-acceptance mechanism implements preferences in centralized settings.

Framework unifies and extends canonical models like reserves and matroids.

Abstract

We develop a general framework for incorporating distributional preferences in market design. We identify the structural properties of these preferences that guarantee the path independence of choice rules. In decentralized settings, a greedy rule uniquely maximizes these preferences; in centralized markets, the associated deferred-acceptance mechanism uniquely implements them. This framework subsumes canonical models, such as reserves and matroids, while accommodating complex objectives involving intersectional identities that lie beyond the scope of existing approaches. Our analysis provides unified axiomatic foundations and comparative statics for a broad class of distributional policies.