An Empirical Framework for Sequential Assignment : The Allocation of Deceased Donor Kidneys

An organ transplant can improve a patient's life while also realizing substantial savings in healthcare expenditures. Like many other scarce public resources, organs from deceased donors are rationed to patients on a waitlist via a sequential offer mechanism. The theoretical trade-offs in designing these rationing systems are not well understood and depend on agent preferences. This paper establishes an empirical framework for analyzing waitlist systems and applies it to study the allocation of deceased donor kidneys. We model the decision to accept an organ or wait for a more preferable organ as an optimal stopping problem, and develop techniques to compute equilibria of counterfactual mechanisms. Our estimates show that while some types of kidneys are desirable for all patients, there is substantial match-specific heterogeneity in values. We then evaluate alternative mechanisms by comparing their effect on patient welfare to an equivalent change in donor supply. Past reforms to the kidney waitlist primarily resulted in redistribution, with similar welfare and organ discard rates as the benchmark first come first served mechanism. These mechanisms and other commonly studied theoretical benchmarks remain far from optimal: we design a mechanism that increases patient welfare by the equivalent of a 14.2 percent increase in donor supply