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Divide and compromise

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  • Nicolò, Antonio
  • Velez, Rodrigo A.

Abstract

We introduce two symmetrized versions of the popular divide-and-choose mechanism for the allocation of a collectively owned indivisible good between two agents when monetary compensation is available. Our proposals retain the simplicity of divide-and-choose and correct its ex-post asymmetry. When there is complete information, i.e., agents know each other well, both mechanisms implement in subgame perfect equilibria a unique allocation that would be obtained by a balanced market. The results hold for general continuous preferences that may not be quasi-linear.

Suggested Citation

  • Nicolò, Antonio & Velez, Rodrigo A., 2017. "Divide and compromise," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 100-110.
    • Handle: RePEc:eee:matsoc:v:90:y:2017:i:c:p:100-110
    DOI: 10.1016/j.mathsocsci.2017.04.004
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    Cited by:

    1. Rodrigo A. Velez, 2017. "Sharing an increase of the rent fairly," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(1), pages 59-80, January.
    2. Tommy Andersson & Lars Ehlers, 2022. "An algorithm for identifying least manipulable envy‐free and budget‐balanced allocations in economies with indivisibilities," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(1), pages 50-60, March.
    3. Brown, Alexander L. & Velez, Rodrigo A., 2016. "The costs and benefits of symmetry in common-ownership allocation problems," Games and Economic Behavior, Elsevier, vol. 96(C), pages 115-131.
    4. Rodrigo A. Velez, 2017. "Equitable rent division," Working Papers 20170818-001, Texas A&M University, Department of Economics.
    5. Velez, Rodrigo A., 2023. "Equitable rent division on a soft budget," Games and Economic Behavior, Elsevier, vol. 139(C), pages 1-14.

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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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