Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/50621
Authors: 
Barde, Sylvain
Year of Publication: 
2011
Series/Report no.: 
School of Economics discussion papers 11,03
Abstract: 
An information-theoretic thought experiment is developed to provide a methodology for predicting endowment distributions in the absence of information on agent preferences. The allocation problem is first presented as a stylised knapsack problem. Although this knapsack allocation is intractable, the social planner can nevertheless make precise predictions concerning the endowment distribution by using its information-theoretic structure. By construction these predictions do not rest on the rationality of agents. It is also shown, however, that the knapsack problem is equivalent to a congestion game under weak assumptions, which means that the planner can nevertheless evaluate the optimality of the unobserved allocation.
Subjects: 
Information theoretic measure
knapsack problem
congestion game
potential function
JEL: 
C02
C62
D51
D83
Document Type: 
Working Paper

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