Scandinavian Working Papers in Economics

Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

No 23/2012: Rationing with baselines: The composition extension operator

Jens Leth Hougaard (), Juan D. Moreno-Ternero and Lars Peter Østerdal
Additional contact information
Jens Leth Hougaard: Institute of Food and Resource Economics, Postal: University of Copenhagen, Rolighedsvej 25, DK-1958 Frederiksberg C, Denmark
Juan D. Moreno-Ternero: Department of Economics, Postal: Universidad Pablo de Olavide, and CORE, Université catholique de Louvain
Lars Peter Østerdal: Department of Business and Economics, Postal: Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: We introduce a new operator for general rationing problems in which, besides conflicting claims, individual baselines play an important role in the rationing process. The operator builds onto ideas of composition, which are not only frequent in rationing, but also in related problems such as bargaining, choice, and queuing. We characterize the operator and show how it preserves some standard axioms in the literature on rationing. We also relate it to recent contributions in such literature.

Keywords: Rationing; baselines; claims; operator; composition

JEL-codes: D63

13 pages, November 29, 2012

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