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Abstract

We consider the problem of fairly allocating a bundle of infinitely divisible commodities among a group of agents with "classical" preferences. We propose to measure an agent's "sacrifice" at an allocation by the size of the set of feasible bundles that the agent prefers to her consumption. As a solution, we select the allocations at which sacrifices are equal across agents and this common sacrifice is minimal. We then turn to the manipulability of this solution. In the tradition of Hurwicz (1972, Decision and Organization, U. Minnesota Press), we identify the equilibrium allocations of the manipulation game associated with this solution when all commodities are normal: (i) for each preference profile, each equal-division constrained Walrasian allocation is an equilibrium allocation; (ii) conversely, each equilibrium allocation is equal-division constrained Walrasian. (iii) Furthermore, we show that if normality of goods is dropped, then equilibrium allocations may not be efficient.

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_552.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 552.

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Length: 30 pages
Date of creation: Aug 2009
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Handle: RePEc:roc:rocher:552

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

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Keywords: equal-sacrifice rule; manipulation game; equal-division Walrasian solution.;

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  12. José Alcalde, 1995. "Implementation of Stable Solutions to Marriage Problems," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 1995-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  19. Roth, Alvin E., 1984. "Misrepresentation and stability in the marriage problem," Journal of Economic Theory, Elsevier, Elsevier, vol. 34(2), pages 383-387, December.
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  23. Serizawa, Shigehiro, 2002. "Inefficiency of Strategy-Proof Rules for Pure Exchange Economies," Journal of Economic Theory, Elsevier, Elsevier, vol. 106(2), pages 219-241, October.
  24. Kibris, Ozgur, 2002. "Misrepresentation of Utilities in Bargaining: Pure Exchange and Public Good Economies," Games and Economic Behavior, Elsevier, Elsevier, vol. 39(1), pages 91-110, April.
  25. Murat R. Sertel & M. Remzi Sanver, 2004. "Strong equilibrium outcomes of voting games ¶are the generalized Condorcet winners," Social Choice and Welfare, Springer, Springer, vol. 22(2), pages 331-347, 04.
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