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Strategy-proof and nonbossy allocation of indivisible goods and money

Author

Listed:
  • Lars-Gunnar Svensson

    (Department of Economics, Lund University, Box 7082, S-22007 Lund, SWEDEN)

  • Bo Larsson

    (Department of Economics, Lund University, Box 7082, S-22007 Lund, SWEDEN)

Abstract

Which strategy-proof nonbossy mechanisms exist in a model with a finite number of indivisible goods (houses, jobs, positions) and a perfectly divisible good (money)? The main finding is that only a finite number of distributions of the divisible good is consistent with strategy-proofness and nonbossiness. Under various additional assumptions - neutrality, individual rationality, object efficiency, weak decentralization - the distribution of the divisible good is further restricted. For instance, under neutrality the outcome of the mechanism can have only one distribution, which is hence independent of individual preferences. In this case the mechanism becomes serially dictatorial. On the other hand, individual rationality leads to a fixed price equilibrium with a well-defined rationing method (Gale's top-trading cycle procedure).

Suggested Citation

  • Lars-Gunnar Svensson & Bo Larsson, 2002. "Strategy-proof and nonbossy allocation of indivisible goods and money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(3), pages 483-502.
    • Handle: RePEc:spr:joecth:v:20:y:2002:i:3:p:483-502
    Note: Received: October 3, 2000; revised version: August 10, 2001
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    Keywords

    Strategy-proof; Nonbossy; Indivisible object; Housing market.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • 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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