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by john_horton
4988 days ago
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Their work has nothing to do with central planning in the sense of committee deciding on production quotas---it's actually about how to allocate indivisible resources (school positions, kidneys, residency slots etc.) in situations where using money isn't feasible and/or the market has broken down due to problems like congestion or lack of market thickness. |
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1. These results are all about finding good solutions to allocation problems without using money or in cases where money isn't or can't be applied.
2. These results do tend to show that a "centrally planned" solution can be better for everyone than a "free market" solution. But as you say, by central planning I really just mean that some entity takes in everyone's preferences and outputs a global allocation, with the nice property that everyone is happy with what they got and nobody can find a way to deviate from their assignment and be better off. One might argue that a "free market" would find the same solution eventually, but it might be slower.
These two results are sort of the opposite of the Invisible Hand stuff as well as the common assumption that, for instance, everyone values money the same (which underlies the justification for much of economics). So I think they're really cool in that respect.