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"Who gets the prize:
the case for random distribution
in non-market allocation"

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Distributing ‘prizes’ randomly —by a lottery—is illustrated using examples from differing contexts. These are: the allocation of a scarce medical treatment, the distribution of tickets at Wimbledon, university entrance in the Netherlands, awarding directory enquiry phone numbers, sacking from jobs in China, sharing common resources in Victorian coal-mines and winning Green Card entry to America. The use of random distribution is explored by reference to standard economic theory such as Rent-Seeking, Elicitation and Prospect Theory, Design of Economic Mechanisms, Information Theory as well more speculative theories related to fairness, justice and inter-personal comparison. Merit is the generally accepted basis for the award of jobs and promotions, or of places at a school or university. The valid knowledge which can be applied to the measurement of this merit is examined and is found to be limited. When knowledge runs out, then in the interests of fairness and efficiency the best way to choose the winner is by randomly selecting from the qualified applicant pool, with chances of selection being weighted according to measured valid merit. For other types of non-market distribution random distribution may be convenient, but a market solution is normally better. It is almost always wrong for public assets to be given to commercial firms using random distribution; extracting full market price by auction is better. When members of a group wish to share a limited number of non-divisible benefits, then random distribution is not only efficient for all concerned; it can enhance human welfare by strengthening inter-personal feelings as well as a sense of justice and fairness, benefits which may apply to all other forms of random distribution as well. Suggestions are made for further development of the idea of random distribution, which include opportunities for field work, and also advocacy.

Contents (in full)

Introduction: Lotteries: from a ludicrous idea to a plausible one

1. Tragic Random Choices:

2. Sporting Chances

3. Glittering Prizes for Merit

4. Lucky Numbers—Nice Business

5. Fortunes in the Organisation

6. Fair Shares in the Common Wealth

7. A Stake in Democracy—citizenship and society

8. Why Random Distribution Works

9. Where Next to Cast Lots

Appendices: How Merit evolved; Measuring Happiness: An Example


Date of submission: September 2005
Date of Viva: December 2005
Date of award: March 2006
Awarding Body: University of Wales

Studied at: Economics Department, University of Wales, Swansea Oct 2003-Sep 2005
Main Supervisor: Dr James Maw
Second Supervisor: Prof John Treble
External Examiner: Prof David Collard (Bath)
Internal Examiner: Prof Lynn Mainwaring
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