∆-Substitute Preferences and Equilibria with Indivisibilities; Rakesh Vohra (University of Pennsylvania)

Abstract

Gross substitutes for quasi-linear preferences is characterized by the single improvement property, which says an agent can improve upon a sub-optimal bundle by adding or dropping a single item, or exchanging one item for another. We extend this notion in two ways: by allowing for non-quasi-linear preferences and the exchange of bundles up to ∆ items. Our results connect the improvement property with the geometry of the choice correspondence. We derive prices at which the excess demand for each good is at most ∆−1and provide applications to the design of pseudo-markets for allocating indivisible resources.