This paper deals with a basic issue: How does one approach the problem of designing the "right" objective for a given resource allocation problem? The notion of what is right can be fairly nebulous; we consider two issues that we see as key: efficiency and fairness. We approach the problem of...

We develop a theory that shows signaling a firm's fundamental quality (e.g., its operational capabilities) to lenders through inventory transactions to be more efficient---it leads to less costly operational distortions---than signaling through loan requests, and we characterize how the...