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New variable-population paradoxes for resource allocation

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Author Info

  • William Thomson

    (University of Rochester)

Abstract

We identify previously unnoticed ways in which agents can strategically distort allocation rules, by affecting the set of “active” agents. (i) An agent withdraws with his endowment. (ii) He gives control of his endowment to someone else and withdraws. (iii) He invites someone in and let him use some of his endowment. (iv) He pre-delivers to some other agent the net trade that the rule would assign to that second agent if that second agent had participated. In (i) and (ii), he and his co-conspirator may end up controlling resources that allow them to reach higher welfare levels than they otherwise would. In (iii) and (iv), he may end up with a bundle that he prefers to the one he would have been assigned had he not engaged in the manipulation. We show that (i) the Walrasian rule is not “withdrawing-proof”, nor “endowments-merging–proof, nor “endowments-splitting–proof”, but that it is “pre-delivery–proof”, and that (ii) canonical selections from the egalitarian-equivalence-in-trades solutions satisfy none of the properties.

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_575.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 575.

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Length: 22 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:roc:rocher:575

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

Related research

Keywords: resource allocation rules; withdrawal-proofness; endowments-merging–proofness; endowments-splitting–proofness; pre-delivery–proofness;

This paper has been announced in the following NEP Reports:

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  1. Sertel, Murat & Yildiz, Muhamet, 2004. "Core is manipulable via segmentation," Journal of Economic Theory, Elsevier, vol. 118(1), pages 103-117, September.
  2. JU, Biung-Ghi & MORENO-TERNERO, Juan D., 2006. "Progressivity, inequality reduction and merging-proofness in taxation," CORE Discussion Papers 2006075, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Sonmez, Tayfun, 1999. "Can Pre-arranged Matches Be Avoided in Two-Sided Matching Markets?," Journal of Economic Theory, Elsevier, vol. 86(1), pages 148-156, May.
  4. Ju, Biung-Ghi & Miyagawa, Eiichi & Sakai, Toyotaka, 2007. "Non-manipulable division rules in claim problems and generalizations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 1-26, January.
  5. M. Angeles de Frutos, 1999. "Coalitional manipulations in a bankruptcy problem," Review of Economic Design, Springer, vol. 4(3), pages 255-272.
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