Fairness and efficiency for allocations with participation constraints

Federico Echenique, Antonio Miralles, Jun Zhang*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)


We propose a notion of fairness for allocation problems in which different agents may have different reservation utilities, stemming from different outside options, or property rights. Fairness is usually understood as the absence of envy, but this can be incompatible with reservation utilities. It is possible that Alice's envy of Bob's assignment cannot be remedied without violating Bob's participation constraint. Instead, we seek to rule out justified envy, defined as envy for which a remedy would not violate any agent's participation constraint. We show that fairness, meaning the absence of justified envy, can be achieved together with efficiency and individual rationality. We introduce a competitive equilibrium approach with price-dependent incomes obtaining the desired properties.

Original languageEnglish
Article number105274
Number of pages29
JournalJournal of Economic Theory
Publication statusPublished - Jul 2021


  • Efficiency
  • Fairness
  • Justified envy
  • Participation constraint
  • Pseudo-market equilibrium


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