Suppose two passengers end up with a reservation to Los Angeles. Two alternatives are proposed:
a. Toss a coin
b. Sell the ticket to the highest bidder
Compare the two options from the standpoint of efficiency and equity.
To compare the two alternatives from the standpoint of efficiency and equity, let's analyze each option separately:
A. Toss a coin:
Efficiency: This option is relatively efficient because it requires minimal resources and time. The decision can be made quickly, and both passengers have an equal chance of winning the ticket.
Equity: From the standpoint of equity, this option is fair because both passengers have an equal opportunity to obtain the ticket. The outcome is unbiased and not influenced by external factors such as wealth or bargaining power.
B. Sell the ticket to the highest bidder:
Efficiency: This option may not necessarily be efficient as it involves a process of bidding, negotiation, and potentially time-consuming price determination. It could lead to delays and complications, especially if the passengers do not agree on the terms. Additionally, it may require additional administrative efforts to facilitate the bidding process.
Equity: From an equity perspective, this option may not be as fair as the previous one. Selling the ticket to the highest bidder favors individuals with higher financial means, potentially disadvantaging passengers who might not be able to bid as much. This introduces an element of privilege based on wealth, which may not be equitable.
In summary, from an efficiency standpoint, the coin toss option is more efficient as it is quicker and simpler. However, when considering equity, the coin toss option is more fair as it provides an equal chance for both passengers. Selling the ticket to the highest bidder, on the other hand, may not be as efficient and may introduce inequality based on financial means. Ultimately, the choice between efficiency and equity depends on the priorities and values of the individuals involved in making the decision.