Module 10 — A New Approach to Market Design
Lesson 6 of 10
Fairness Memory
Learning objectives
By the end of this lesson you should be able to:
- Understand what is meant by fairness memory.
- Explain why fairness may need to be considered over time rather than at individual moments.
- Recognise how previous allocations can influence future decisions.
- Appreciate the difference between instantaneous fairness and long-term fairness.
- Understand why fairness memory complements a stateful market architecture.
Introduction
Many market decisions are made one request at a time.
At each moment, the objective is to determine a fair and efficient allocation using the information currently available.
However, fairness is not always judged using a single decision.
People often evaluate fairness by considering what has happened over time.
For example:
Has everyone received similar opportunities?
Has one participant consistently received preferential treatment?
Has someone who was disadvantaged earlier been compensated later?
These questions suggest that fairness may depend not only on the present, but also on the past.
This idea forms the basis of fairness memory.
Fairness through time
Consider two consumers requesting the same service.
One receives access immediately.
The other must wait.
Looking only at that moment, the outcome appears unequal.
However, if the second consumer receives priority the next time a similar situation occurs, the longer-term outcome may be considered fairer.
Fairness therefore depends not only on individual decisions but also on how decisions are distributed over time.
Instantaneous and long-term fairness
It is useful to distinguish between two perspectives.
Instantaneous fairness considers whether a single allocation is fair at the moment it is made.
Long-term fairness considers whether opportunities and outcomes remain balanced across many allocation decisions.
Neither perspective is necessarily more important.
Many real systems seek to balance both.
Remembering previous allocations
A stateful allocation mechanism naturally maintains information about the evolving condition of the electricity system.
It may also maintain information about previous allocations.
Examples include:
- previous access to scarce resources,
- historical service quality,
- prior interruptions,
- earlier priority decisions,
- cumulative resource allocation.
This historical information can inform future decisions where appropriate.
Why memory matters
Many electricity resources are allocated repeatedly.
Consumers purchase electricity every day.
Generators supply power over many years.
Flexible devices participate continuously.
If fairness is assessed only at individual moments, repeated small disadvantages may accumulate over time.
Maintaining fairness memory allows these longer-term patterns to be recognised when future allocation decisions are made.
A simple example
Imagine that electricity demand exceeds available supply during several evenings.
If the same neighbourhood experiences reduced service every time, many people would regard this as unfair.
An alternative approach is to remember previous outcomes and rotate or rebalance future allocations where this is consistent with wider system objectives.
In this way, fairness is evaluated across the entire sequence of decisions rather than at a single point in time.
Balancing fairness and efficiency
Fairness memory does not replace other objectives.
Electricity systems must still remain:
- physically feasible,
- economically efficient,
- secure,
- reliable.
Instead, fairness memory becomes one factor within the overall allocation process.
Different market designs may place different levels of importance on historical fairness depending on their objectives.
Transparency
If historical information influences allocation decisions, the rules should remain transparent.
Participants should understand:
- what information is retained,
- how long it is retained,
- how it influences future allocations,
- how decisions can be reviewed.
Clear rules help ensure that fairness remains understandable and accountable.
Building on previous lessons
Earlier lessons introduced the idea that the market continuously maintains the current state of the electricity system.
Fairness memory extends this idea.
The market remembers not only the physical state of the network but also relevant aspects of previous allocation decisions.
This allows fairness to become an ongoing property of market operation rather than something assessed independently within each allocation.
A broader perspective
Many systems already use historical information when making decisions.
Examples include:
- customer loyalty programmes,
- congestion management,
- computer network scheduling,
- operating system resource allocation.
In each case, previous outcomes may influence future decisions in order to achieve broader objectives over time.
Fairness memory applies a similar principle to the coordination of electricity resources.
A key insight
Fairness is not always determined by a single allocation.
In many situations, fairness depends on how opportunities and outcomes are distributed over time.
A stateful market can support this by maintaining information about previous allocations and using that information consistently within future decisions.
Key takeaways
- Fairness can be evaluated over time as well as at individual moments.
- Fairness memory allows previous allocation decisions to inform future ones.
- Maintaining historical information complements a stateful market architecture.
- Long-term fairness may differ from instantaneous fairness.
- Fairness memory should operate using transparent and well-defined rules.
- Different market designs may implement fairness memory in different ways depending on their objectives.
Looking ahead
So far, we have explored how the market remembers its state, continuously updates allocations, respects physical network constraints, distributes prices and maintains fairness over time.
The next lesson examines how participants can express forward requests and flexible demand, allowing the market to coordinate not only where electricity is used, but also when it is used.