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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. Gale, David, 1974. "Exchange equilibrium and coalitions : An example," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 63-66, March.
  2. Murat Atlamaz & Bettina Klaus, 2007. "Manipulation via Endowments in Exchange Markets with Indivisible Goods," Social Choice and Welfare, Springer, vol. 28(1), pages 1-18, January.
  3. Aumann, R. J. & Peleg, B., 1974. "A note on Gale's example," Journal of Mathematical Economics, Elsevier, vol. 1(2), pages 209-211, August.
  4. Pazner, Elisha A & Schmeidler, David, 1978. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," The Quarterly Journal of Economics, MIT Press, vol. 92(4), pages 671-87, November.
  5. 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.
  6. Matthew O. Jackson & Asher Wolinsky, 1994. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Lin Zhou & Stephen Ching, 2002. "Multi-valued strategy-proof social choice rules," Social Choice and Welfare, Springer, vol. 19(3), pages 569-580.
  8. Schmeidler, David & Vind, Karl, 1972. "Fair Net Trades," Econometrica, Econometric Society, vol. 40(4), pages 637-42, July.
  9. 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.
  10. Hyungjun Kim, 2004. "Population monotonic rules for fair allocation problems," Social Choice and Welfare, Springer, vol. 23(1), pages 59-70, 08.
  11. Moulin, Herve & Thomson, William, 1988. "Can everyone benefit from growth? : Two difficulties," Journal of Mathematical Economics, Elsevier, vol. 17(4), pages 339-345, September.
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