Altruism and fairness in Schelling’s segregation model

Abstract

In Schelling’s segregation model (Schelling, 1971), the successive moves of agents optimizing their own locations lead to a suboptimal segregated distribution of the population, even though all agents have the same preference for mixed neighborhoods. The reason is that when moving, individuals have an impact on others that they do not internalize in their optimization problems. Jensen et al. (2018) showed that even a very small fraction of altruistic individuals internalizing the common objective of reaching a mixed distribution of the population is enough to solve inefficiencies.We elaborate on the model of Jensen et al. (2018) and make the further assumption that altruistic agents have fairness considerations, either regarding the utility changes involved by their moves, or regarding the absolute utility levels in the population with inequality aversion. We show that if altruistic individuals have enough concern for fairness, inefficiencies are reintroduced.