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Borrowing-proofness

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Abstract

We formulate and study the requirement on an allocation rule that no agent should be able to benefit by augmenting his endowment through borrowing resources from the outside world (alternatively, by simply exaggerating it). We show that the Walrasian rule is not "borrowing-proof" even on standard domains. More seriously, no efficient selection from the endowments-lower-bound correspondence, or from the no-envy-in-trades correspondence, or from the egalitarian-equivalent-in-trades correspondence is borrowing-proof. These impossibilities hold even on the domain of economies with homothetic preferences.

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_545.pdf
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Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 545.

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Length: 29 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:roc:rocher:545

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Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

Related research

Keywords: borrowing-proofness; Endowment lower bound; No-envy-in-trades; Egalitarian-equivalent-in-trades.;

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  1. Murat Atlamaz & Bettina Klaus, 2003. "Manipulation via Endowments in Exchange Markets with Indivisible Goods," UFAE and IAE Working Papers 598.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  2. Gale, David, 1974. "Exchange equilibrium and coalitions : An example," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 63-66, March.
  3. Moulin, Herve & Thomson, William, 1988. "Can everyone benefit from growth? : Two difficulties," Journal of Mathematical Economics, Elsevier, vol. 17(4), pages 339-345, September.
  4. Lin Zhou & Stephen Ching, 2002. "Multi-valued strategy-proof social choice rules," Social Choice and Welfare, Springer, vol. 19(3), pages 569-580.
  5. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
  6. Chun, Youngsub & Thomson, William, 1988. "Monotonicity properties of bargaining solutions when applied to economics," Mathematical Social Sciences, Elsevier, vol. 15(1), pages 11-27, February.
  7. Chichilnisky, Graciela & Thomson, William, 1987. "The walrasian mechanism from equal division is not monotonic with respect to variations in the number of consumers," Journal of Public Economics, Elsevier, vol. 32(1), pages 119-124, February.
  8. Aumann, R. J. & Peleg, B., 1974. "A note on Gale's example," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 209-211, August.
  9. Schmeidler, David & Vind, Karl, 1972. "Fair Net Trades," Econometrica, Econometric Society, vol. 40(4), pages 637-42, July.
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