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Waitlists are often used to ration scarce resources, but the trade‐offs in designing these mechanisms depend on agents' preferences. We study equilibrium allocations under alternative designs for the deceased donor kidney waitlist. We model the decision to accept an organ or wait for a preferable one as an optimal stopping problem and estimate preferences using administrative data from the New York City area. Our estimates show that while some kidney types are desirable for all patients, there is substantial match‐specific heterogeneity in values. We then develop methods to evaluate alternative mechanisms, comparing their effects on patient welfare to an equivalent change in donor supply. Past reforms to the kidney waitlist primarily resulted in redistribution, with similar welfare and organ discard rates to the benchmark first‐come, first‐served mechanism. These mechanisms and other commonly studied theoretical benchmarks remain far from optimal. We design a mechanism that increases patient welfare by the equivalent of an 18.2% increase in donor supply.
Many scarce public resources are allocated through wait lists that use priorities for individual agents. A new priority system for allocating deceased donor kidneys was adopted in 2014. This redesign was guided by simulations that held decision-rules fixed. We synthesize recent theoretical results to show that the welfare effects of a mechanism depend on the interaction between dynamic incentives and heterogeneity in preferences. We show evidence suggesting that patient decisions on the deceased donor kidney wait list respond to dynamic incentives. Therefore, an empirical approach to dynamic mechanism design is an essential complement to mechanism design theory in dynamic environments.
Public housing benefits are rationed through wait lists. Theoretical work on public housing allocation has debated how much choice applicants should have over units, identifying a possible trade-off between efficiency and redistribution. This paper empirically establishes the existence and economic importance of this trade-off using wait list data from Cambridge, Massachusetts. I estimate a model of public housing preferences in a setting where heterogeneous apartments are rationed through waiting time. Eliminating choice would improve targeting but reduce tenant welfare by more than 30 percent. Such a change is only justified on targeting grounds by a strong social preference for redistribution. (JEL D47, H75, I38, R38)
Transfers paid through annual tax refunds are a large but uncertain source of income for poor households. We document that low-income tax-filers have substantial subjective uncertainty about these refunds. We investigate the determinants and consequences of refund uncertainty by linking survey, tax, and credit bureau data. On average, filers' expectations track realized refunds. More uncertain filers have larger differences between expected and realized refunds. Filers borrow in anticipation of their refunds, but more uncertain filers borrow less, consistent with precautionary behavior. A simple consumption-savings model suggests that refund uncertainty reduces the welfare benefits of the EITC by about 10 percent.
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