An information and preference theory approach to a discrete resource allocation problem

Abstract

This paper analyses a discrete resource allocation problem (RAP) from a background of preference and information theory. The discrete RAP examines the problem of allocation of discrete and indivisible scarce resources in a multiple agent group environment from the point of view of a coordinator. The basis for resource allocation is preference information of each agent regarding the discrete resources. Such preference information is obtained by the coordinator through an experimental process that entails interrogating each of the agents about their preference profiles. In this environment, the experiments are pairwise comparisons between resource bundles about which there is no a priori preference information. Each such experiment can have three possible signals: a bundle is preferred to, indifferent to or less preferred to another. It is this experimental process of interrogation described above, restricted to a single agent, that is analysed from an information theoretic viewpoint. In addition, the paper provides a systematic method of solution to the resource allocation problem in the single agent context.