The nested collective lottery that maximizes welfare under consumption interdependence

Abstract

We develop a generalized lottery mechanism in this article that allows people to choose to succeed separately while retaining both merits (fairness and options to succeed jointly) of the collective lottery developed by Chen et al. (2010). We use the rationing of hunting permits in the US and Canada as examples to show the applicability of this generalized lottery mechanism.

Keywords:

• rationing lotteries
• public-owned private goods
• scarce commodities
• indivisible objects
• consumption interdependence

JEL Classification::

• D45
• H42

Notes

¹ If some persons cannot be included in a box, we refer to them as the outsiders. There are (N - SV) persons who cannot be put into any boxes, and there are (W - KV) goods that will be distributed.

² Being separate (in different nests) or together (in the same box) is based on the applicants’ preferences. However, it can also be based on the authority's preference, too. For example, the military authorities can place applicants with certain skills/body conditions into different nests to ensure that they recruit a combination of men that the authority wants.