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A Solomonic solution to the problem of assigning a private indivisible good

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  • Athanasiou, Efthymios

Abstract

A benevolent Planner wishes to assign an indivisible private good to n claimants, each valuing the object differently. Individuals have quasi-linear preferences. Therefore, the possibility of transfers is allowed. A second-best efficient mechanism is a strategy-proof and anonymous mechanism that is not Pareto dominated by another strategy-proof and anonymous mechanism. In this context, we identify three conditions that are necessary and, together with Voluntary Participation, sufficient for a mechanism to be second-best efficient. This set includes mechanisms that destroy the good at certain profiles. For domains comprising two individuals we provide an explicit characterization of the family of second-best efficient mechanisms.

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  • Athanasiou, Efthymios, 2013. "A Solomonic solution to the problem of assigning a private indivisible good," Games and Economic Behavior, Elsevier, vol. 82(C), pages 369-387.
  • Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:369-387
    DOI: 10.1016/j.geb.2013.07.007
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    1. Paula Jaramillo & Çaǧatay Kayı & Flip Klijn, 2014. "Asymmetrically fair rules for an indivisible good problem with a budget constraint," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(3), pages 603-633, October.
    2. Sprumont, Yves, 2013. "Constrained-optimal strategy-proof assignment: Beyond the Groves mechanisms," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1102-1121.
    3. Efthymios Athanasiou & Giacomo Valletta, 2021. "Undominated mechanisms and the provision of a pure public good in two agent economies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(4), pages 763-795, November.
    4. Efthymios Athanasiou & Santanu Dey & Giacomo Valletta, 2016. "Groves mechanisms and communication externalities," Review of Economic Design, Springer;Society for Economic Design, vol. 20(1), pages 1-37, March.
    5. C. Gizem Korpeoglu, 2018. "Allocation of an indivisible object on the full preference domain: axiomatic characterizations," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(1), pages 41-53, April.
    6. Mukherjee, Conan, 2015. "On Axioms Underlying Use of Reserve Price," Working Papers 2015:7, Lund University, Department of Economics, revised 14 Apr 2015.
    7. Drexl, Moritz & Kleiner, Andreas, 2015. "Optimal private good allocation: The case for a balanced budget," Games and Economic Behavior, Elsevier, vol. 94(C), pages 169-181.
    8. Athanasiou, E. & Dey, S. & Valletta, G., 2012. "On sharing the benefits of communication," Research Memorandum 016, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

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    More about this item

    Keywords

    Indivisible private good; Quasi-linear preferences; Strategy-Proofness; Vickrey–Clarke–Groves mechanism;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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