The cleaning up of waste present in transboundary rivers, which requires the cooperation of different authorities, is a problematic issue, especially when responsibility for the discharge of the waste is not well-defined.Following Ni and Wang [12] we assume that a river is a segment divided into several regions from upstream to downstream. We show that when the transfer rate of the waste is unknown, the clean-up cost vector provides useful information for estimating some limits in regard to the responsibility of each region. We propose a cost allocation rule, the Upstream Responsibility rule, which takes into account these limits in distributing costs "fairly" and we provide an axiomatic characterization of this rule via certain properties based on basic ideas concerning the responsibility of regions.JEL classification: C71; D61

There is a wide range of economic problems that involve the exchange of indivisible goods with no monetary transfers, starting with the housing market model of the seminal paper by Shapley and Scarf (1974) and including other problems such as kidney exchange or school choice problems. The classical solution to many of these models is to apply an algorithm/mechanism called Top Trading Cycles, attributed to David Gale, which satisfies good properties for the case of strict preferences. In this paper, we propose a family of mechanisms, called Top Trading Absorbing Sets mechanisms, which generalizes the Top Trading Cycles to the general case in which individuals are allowed to report indifferences, while preserving all its desirable properties.

Roommate problem, Random paths to stability, C78,

According to Alesina and Angeletos (2005), societies are less redistributive but more efficient when the median voter believes that effort and talent are much more important than luck to determine income. We test these results through a lab experiment in which participants vote over the tax rate and their pre-tax income is determined according to their performance in a real effort task with leisure time. Subjects receive either a high or a low wage and this condition is either obtained through their talent in a tournament or randomly assigned. We compare subjects' decisions in these two different scenarios considering different levels of wage inequality. In our framework, this initial income inequality turns out to be crucial to support the theoretical hypothesis of Alesina and Angeletos (2005). Overall, we find that, only if the wage inequality is high, subjects choose a lower level of income redistribution and they provide a higher effort level in the scenario in which high-wage subjects are selected based on their talent through a tournament (than when it is randomly). Thus, we confirm almost all theoretical results in Alesina and Angeletos (2005) when the wage inequality is high enough. The big exception is for efficiency (measured as the sum of total payoffs), since theoretical results only hold for the scenario in which wage inequality is low.

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